Encouraging UK homes data boosts Sterling Commodities and oil rising
Tuesday, 9 June 2009
FX Market Overview
Isn’t it ironic that Gordon Brown has hired Sir Alan Sugar at a time when the country is trying to tell the PM, ‘You’re fired’ but can’t get the message through? But as the Prime Minister settles into his bunker in Downing Street amongst some of his most trusted friends, the country wonders what will happen next.
Sterling started the week on a real downer after political shenanigans and USD strength took their toll but bounced rather well during yesterday’s trade. Many are attributing the Pound’s recovery to the result of the Royal Institution of Chartered Surveyors which showed the housing market is stabilising and that the surveyors themselves are forecasting the slowest decline in house prices in 18 months or so. However, that report only hit the newswires at midnight and the Pound was advancing well before London’s closing bell so it seems traders had just had enough of selling Sterling.
They will certainly have been encouraged by the rise in stock markets across the globe and a rise in Australian business confidence; such events are desperately welcome as everyone is hoping for an end to the economic decline. However, everyone is also nervous of being too quick to believe the recovery has started just in case they have jumped the gun and end up getting their fingers burned. This morning’s news that Lloyds is closing all of their Cheltenham and Gloucester Branches was a stark warning that the storm clouds haven’t yet disappeared over the horizon.
Nevertheless, the rise in oil, gas and other commodities will encourage those who want to be encouraged and we are probably set for a few more false dawns before the real recovery starts to show it true colours. And the British Retail Consortium saw like for like sales fall at a 0.8% annualised pace last month, so the British public is still not certain that the good times are ready to roll again.
Today is light on data. We will get a smattering of German industrial production and trade balance data but that is about that really. I don’t envisage a very volatile day but there is a real chance that Sterling will; continue to trade in a fairly tight range and that the US Dollar will stay on the back foot for the time being. As for other currencies, well the rise in oil prices is helping the Canadian Dollar but Sterling has managed to make some ground here. The Australasian currencies have not been helped by the rise in commodity prices but have been sold off a little as carry trade investors were wary of entering into too many new investments while talk of higher US interest rates is doing the rounds.
Whether America will see its lending rates rise before the end of the year is open to debate and that debate will probably continue for another 6 months and 24 days but it will take a lot more encouraging data before the Fed will be ready to take such bold action.
So make the most of this more languid trading environment, don’t worry about politics for a while; clearly we don’t have a lot of say except for every 4 years or so when we get to vote. In the intervening period the politicos can do much as they please without it seems fear of contradiction or conviction (and I mean that in a legal sense). Never mind eh! It’ll all work itself out in the end once they have all taken their early retirement and started receiving their gilt edged pensions that we are paying for out of the taxes they robbed from our pensions. Yours sincerely, Mr Angry from near Tunbridge Wells.
Sterling started the week on a real downer after political shenanigans and USD strength took their toll but bounced rather well during yesterday’s trade. Many are attributing the Pound’s recovery to the result of the Royal Institution of Chartered Surveyors which showed the housing market is stabilising and that the surveyors themselves are forecasting the slowest decline in house prices in 18 months or so. However, that report only hit the newswires at midnight and the Pound was advancing well before London’s closing bell so it seems traders had just had enough of selling Sterling.
They will certainly have been encouraged by the rise in stock markets across the globe and a rise in Australian business confidence; such events are desperately welcome as everyone is hoping for an end to the economic decline. However, everyone is also nervous of being too quick to believe the recovery has started just in case they have jumped the gun and end up getting their fingers burned. This morning’s news that Lloyds is closing all of their Cheltenham and Gloucester Branches was a stark warning that the storm clouds haven’t yet disappeared over the horizon.
Nevertheless, the rise in oil, gas and other commodities will encourage those who want to be encouraged and we are probably set for a few more false dawns before the real recovery starts to show it true colours. And the British Retail Consortium saw like for like sales fall at a 0.8% annualised pace last month, so the British public is still not certain that the good times are ready to roll again.
Today is light on data. We will get a smattering of German industrial production and trade balance data but that is about that really. I don’t envisage a very volatile day but there is a real chance that Sterling will; continue to trade in a fairly tight range and that the US Dollar will stay on the back foot for the time being. As for other currencies, well the rise in oil prices is helping the Canadian Dollar but Sterling has managed to make some ground here. The Australasian currencies have not been helped by the rise in commodity prices but have been sold off a little as carry trade investors were wary of entering into too many new investments while talk of higher US interest rates is doing the rounds.
Whether America will see its lending rates rise before the end of the year is open to debate and that debate will probably continue for another 6 months and 24 days but it will take a lot more encouraging data before the Fed will be ready to take such bold action.
So make the most of this more languid trading environment, don’t worry about politics for a while; clearly we don’t have a lot of say except for every 4 years or so when we get to vote. In the intervening period the politicos can do much as they please without it seems fear of contradiction or conviction (and I mean that in a legal sense). Never mind eh! It’ll all work itself out in the end once they have all taken their early retirement and started receiving their gilt edged pensions that we are paying for out of the taxes they robbed from our pensions. Yours sincerely, Mr Angry from near Tunbridge Wells.
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