Market Report

Another quiet day on the data front from the United States. The Dollar lost a little ground over the last 24 hours having reached a high of 1.8420 yesterday it currently stands at 1.8537. With inflation being the big concern it now seems certain that the interest rates will rise by at least one quarter of a percent this month with a better than even chance of more increases soon. All this seems to be good for the Dollar and once again in my opinion we may see the Dollar pushing back up towards 1.80 before to long.

With the lack of any real data today there seems little reason to believe there will be any dramatic moves in the Sterling rate against the Euro. We currently stand at 1.4640 we may have to see England do better in the world cup to give sterling a boost.

Have a good weekend all.

VC

The CPI (consumer price index) for the states came out yeresterday up 0.3 therefore higher inflation means higher interest rates it looks to be a done deal on the 29th June for a 25 bp hike with some talking of a 50bp move to bring us to the end of the cycle. We feel due to this data the dollar may weaken a possibly move up to around the 1.8550 level.

Purchases related to the World Cup tournament are likely to muddy the waters and it suggests that World Cup-related purchases were a significant factor in boosting High Street activity these should lead to good retail sales figures. Mervyn King gave markets a steer at May's Inflation Report press conference on how the Monetary Policy Committee (MPC) is likely to interpret the sales figures. He acknowledged that, "The pattern of retail sales may well be affected by people acquiring consumer durables before the World Cup." Given that, he said that the MPC will "have to look to what's going on in the trend."

But despite the fall in mortgage approvals in April, the level of approvals suggests the trend rate of retail sales volume growth (on a three-month-on-three-month rate) looks set to rise fairly sharply to around 1% in three months time. This should all be positive for Sterling. GBP EUR is still bouncing between 1.4610 - 1.4641.

DH

Today sees the release from the United States of the Consumer Price Index (CPI). With inflation slightly above the Government target should we see a negative figure this will surely be confirmation of another interest rate rise in June, and as stated yesterday we could see the Dollar strengthening once again. The Dollar currently stands at 1.8431 against Sterling.

This side of the big pond sees the unemployment figures released from the UK. This has shown signs of being on the increase of late, this would normally be a sign that there is unlikely to be an increase in the interest rate but with inflation also on the increase this may not be the case. The Sterling rate against the Euro currently stands at 1.4632.

Todays main events
09.30am - UK: Unemployment rate
09.30am - UK: Average earnings
13.30pm - US: CPI

VC

Good morning to you all, today sees the start of a busy week for the markets with a number of figures to be released. Today sees the Retail sales figure for May released in the United States. With the Dollar doing well as of late currently standing at 1.8412 after pushing towards 1.90 over the last few weeks, should we see another good figure for the Dollar we may see it start to test the 1.80 level before very long.

This side of the water sees a number of figures released today mainly the CPI from the UK which has shown a slight rise in inflation pushing it above the 2.0% government target to 2.2%. This may indicate a rate rise in the not to distant future. The ZEW from Germany will have an impact on the Sterling/Euro rate which currently stands at 1.4650 after Sterling recovered from a low of 1.4470 last week.

VC

Good morning viewers. A beautiful weekend, and the beautiful game has hit our screens with 8 games being shown the last 3 days!

I hope the men out there are pacing themselves, because I am already getting into trouble with my other half!

On to more pressing matters. Friday saw the release of non farm pay roll figures from the states, which came out as a deficit of $61 billion deficit, which was slightly better than expected. This saw the dollar strengthen from 1.8440 to 1.8365, only for it to come straight back to 1.8440 later in the day. It has started trading today at exactly where it left on Friday.

This week sees US retail sales on Tuesday, and US Consumer Price index (CPI) on Wednesday. The results of these figures should show us which way the rate should move over the next week, and also confirm that the interest rates will be put up by 0.25% again next month.

GBP/EUR rate has jumped from 1.4565 to 1.4620 this morning, with no real reason for it. I think it is the traders coming back into work after a nice sunny weekend and an England victory!!!

DE