A daily look at the FX markets from Moneycorp.com.
For the latest FX Daily Trading Update see FX Day Trading.
FX Day Trading - 14 July 2010
UK inflation figures higher than expected
Sterling firmer everywhere
Next hurdle is today's employment data
The erstwhile Mayor of London, Ken Livingstone, took the rap - often unfairly - from critics who accused him of dreaming up oddball schemes for the capital. But is there something in the water at City Hall that makes every holder of the post liable to flights of fancy?
The Telegraph reveals today that 'Fat cleared from London sewers will fill nine double-decker buses'. The subheading goes on to say 'Enough fat to fill nine double-decker buses is being removed from sewers in central London in the largest ever sewer clean-up of its kind.' Whatever is Boris intending to do with nine buses filled with fat?
Perhaps he has in mind to drive them round to the Treasury: goodness knows, there is precious little fat around there at the moment. The Office for National Statistics revealed yesterday the results of its efforts to calculate the total size of the country's debts, including public sector pension liabilities and payments promised to contractors under private finance initiatives.
The bottom line (if it really is the bottom line) is that adding Britain's debt to other previously unacknowledged liabilities produces a figure just short of £4 trillion**. The number is roughly four times as large as any government has previously admitted.
There are several possible reasons why there was no obviously negative reaction by sterling to the news. First, everyone already knew that for ten years the government had been concealing its liabilities through the use of private finance initiatives and similar wheezes. Whilst they did not appear on the nation's balance sheet the exchequer still carried the can for their performance. Second, there is probably no other country in the world that bares its soul in this way so the numbers have no directly comparable equivalent. Third, investors were much more interested in the here-and-now of the inflation data.
And those figures worked in favour of the pound. Prices went up in June when they had been expected to be steady. The core consumer price index was up by 3.1% on the year instead of the forecast 2.8%. RPI was ahead of forecast both on a monthly and an annual basis. The figures were not miles away from what investors had been expecting but were sufficiently adrift in the right direction to take sterling higher.
Against the US dollar, the yen, the Canadian dollar and the Swiss franc sterling was able to build on its initial gains during the rest of the day. It put in a more chequered performance against the antipodean dollar but managed to stay ahead of them in the end.
The pound/euro rate encountered a sort of quantum rally that turned into a retreat as soon anyone measured it; up one cent, count to five, down one cent and it was back where it started. Even so, sterling has managed to pick itself up overnight and it opens in London this morning a couple of dozen ticks higher than it began Tuesday.
The reason for sterling's about turn against the euro was a worse than expected US trade deficit. It catalysed a sharp upward move for euro/dollar which the pound could not match.
Sentiment towards the euro also improved when Greece was able to sell six-month treasury notes at a yield of 4.65%. There were bids for more than three times the €1.6 billion that were on offer. It was not the sort of performance that would have had them cheering in the streets of Berlin but, in the context of abiding nervousness about Greece, it was a result.
Figures released overnight brought disappointment in New Zealand when a 0.4% monthly rise in retail sales fell short of the 0.6% that investors had been expecting. A fall in Nationwide's index of UK consumer confidence from 66 to 63 was roughly in line with forecast while an 11.1% improvement in Australian consumer confidence took Westpac's index from 101.9 to 113.1. None of those figures had any material impact on exchange rates.
The four big-league data sets today relate to UK employment, Euroland inflation and industrial production and US (provisional) retail sales. The euro zone inflation figures will probably be easiest to dismiss as long as they remain low. Industrial production might do the euro a favour if it is as strong as the analysts predict. By the same logic the US retail sales numbers could work against the dollar if they confirm another month of falling sales.
Sterling will stand or fall by the change in claimant count; a decent fall in the number of dole claimants would be helpful.
Currency Trading and Spread Betting carry a high level of risk to your capital and you can lose more than your initial investment, they may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.
The above content does not constitute investment advice, it is provided purely for information purposes and is delivered as a personal view of the writer. Neither the contributing company (or writer) nor Online-Spread-Betting.com accepts any responsibility for any use that may be made of the content.
Note - Spread Betting carries a high level of risk to your capital and you can lose more than your initial investment, it may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.
'FX Day Trading 14 Jul 2010', Article by Moneycorp, last update: 14-Jul-10
Related articles:
FX Day Trading, 10-Feb-12,
Daily FX Trading updates covering the influences on the key FX markets. Daily updates include key FX market movements and features the Dollar, Pound, Euro and Yen as well as...see: FX Day Trading
FX Day Trader, 9-Feb-12,
A daily review of the currency markets concentrating on the major Dollar, Yen, Euro and Pound Sterling markets...see: FX Day Trader
£1 per point: Start trading £1 per point/tick & an initial deposit of £30
Multiple markets: Forex , Commodities, Indices & Equities
Risk Warning - Spread betting carries a high level of risk to your capital & you may lose more than your initial investment. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved, seek financial advice where necessary & make sure spread betting meets your investment objectives.
(1) The FTSE Rolling Daily Spread is 1 tick during market hours & 4 ticks out of hours. 1 Tick is defined as a full FTSE point. See our Product Information for more details. (2) The above information is correct at time of writing. (3) Tax Law can change.
FinancialSpreads.com is a trading name of London Capital Group Ltd which is authorised & regulated by the Financial Services Authority (FSA). Registered address: is 4th Floor, 12 Appold Street, London EC2A 2AW. All information correct at time of publication.
Risk Warning:
Spread Betting carries a high level of risk
to your capital and you can lose more than your initial investment,
it may not be suitable for all investors. Ensure you only
speculate with money that you can afford to lose and that you fully
understand the risks involved and seek independent financial advice where necessary.
Disclaimer:
Online-Spread-Betting.com does not endorse the information and
analysis available on this site. It is provided purely for information
purposes and is delivered as a personal view of the writer. Under no circumstances
is the information hereon to be used or considered as, an offer to sell, or a
solicitation of any offer to buy. The website content does not constitute investment
advice and neither the individual contributor nor Online-Spread-Betting.com accepts any
responsibility for any use that may be made of the content.
* Tax Free Trading:
Tax law is subject to change. It may also differ if you pay tax in a jurisdiction outside the UK.
