Market Report

Good morning all, after the activity in Europe yesterday, today sees the emphasis return to the United States with the Trade figures to be released this afternoon at (13.30). Last month saw a deficit of $62 billion with todays figure expected to be a $65 billion deficit. Should we see any variation in the expected figure we may see the Dollar move accordingly. Currently the Dollar rate against Sterling stands at 1.8420.

Yesterday the Bank of England left the interest rate unchanged which was more or less expected in the markets, however the European Central Bank raised its rate by a quarter of one percent. This seems to have had a slightly negative effect on the Euro which can be explained by the fact a lot of people were expecting a half a percent rise. The Sterling rate against the Euro at present stands at 1.4570.

Have a great weekend and enjoy the world cup.

VC

We continue to see the US Dollar rebounding and making gains across the board. Sterling touched a low of 1.8469 against the US Dollar this morning and sterling against the Euro hit a low of 1.4471 which is the lowest we have seen GBP against the Euro for a number of weeks.

There tends to be quite a lot of uncertainty in the markets at the moment with most major institutions awaiting the results on interest rates from the European Central Bank and then Bank of England at lunchtime today.

It would appear to be highly unlikely that the Bank of England will be moving rates but the consensus would be that the European Central Bank will be raising rates by a ½ % (50 basis points) or if not by ¼ % (25 basis points).

If in the unlikely event that the ECB were to keep rates on hold then I would recommend that you go and book your holidays to Spain this afternoon.

PW

Once again we have seen more strength for the Dollar opening this morning at 1.8570 compared with 1.8720 yesterday; this seems to be turning into a little run for the Dollar. This may be short lived after a statement from a member of the Federal Reserve Bank (FED) stating that inflation may not be such a problem once the price of oil stabilises. Which may indicate that there will be no interest rate hike in June after all?

The Sterling rate against the Euro seems a little stagnant at the moment having hardly moved over the last twenty four hours. This looks all set to change on Thursday when the European Central Bank (ECB) meets to decide the next interest rate move. This could be influenced by a statement saying they believe the Euro level at present is satisfactory but they are still showing a slight nervousness that the Euro will strengthen to much, leaving room for a rate hike on Thursday of between a quarter to half a percent. Which I believe will really spark the markets to life. Let's see what tomorrow brings.

VC

Good morning to you all, the Dollar saw a little rise in its fortunes yesterday from a low of 1.8880 to reach 1.8700. This seems to be in response to a speech given by Mr Bernanke the Federal Reserve Bank of New York chairman that has led the markets to believe there may be room for a hike in interest rates in June. This in my opinion, seems to be reading a little too much into it and I believe we may see the Dollar test the 1.90 mark again.

All eyes are on the European Central Bank meeting this Thursday with the expected hike in interest rates to be as much as half of one percent which would put Sterling under even more pressure. With this in mind, if they fail to put it up at all or only by a quarter of one percent we may see Sterling fortunes change around rapidly.

Watch this space.

VC

Friday's non farm payroll (us employment figures) has had a major effect on the dollar. General expectation was up around 220K but came out up 75k which has caused the dollar to weaken and has moved up to around 1.8850. There are various orders in place around the 1.89 level. We feel there will be resistance to break through this level today but there maybe downward move before it tries once again to push toward the magical level of 2.

The Euro has been the most consistent currency over the last few trading days. It looks as if it will continue to make small gains against GBP and is currently trading at a month low. There may be a little sterling push on Thursday when the European Central Bank (ECB) makes its decision regarding the Euro zones interest rates. We expect a raise of 25 basis points (bp) but a raise of 50bp would make things interesting and you could see more pressure on Sterling.

Have a good day and call us if you need any FX advice either on rates or the market in general.

VC