Daily Currency report
29th July 2012
Daily Market Commentary
From Peter-John Theuninck, Currency Analyst at Baydonhillfx
The Olympics kicked off in spectacular fashion on Friday as the opening ceremony showed the world the best that Britain had to offer, our athletes too have not let us down as they claimed 2 medals over the weekend, one silver and one bronze. Optimism in the markets was equally positive on Friday as the Pound and the Euro continued their upward trends versus the Dollar.
The single currency was supported by political rhetoric, German Chancellor Angela Merkel and French President Francois Hollande pledged to do all in their power to protect the Euro in a statement released on Friday. The leaders on Europe’s two largest economies reaffirmed to the market their commitment to aiding indebt countries which eased concerns over Spain widening debt problems as more of the country’s regional government have come forward to request central government support.
German inflation data was also released on Friday and did not hurt the Euro as price pressures remained unchanged as expected. This means that the European Central Bank is under less pressure to monetary policy action and more cash injections into the economy as less likely to cause problems further on down the road.
US GDP figures added to the Dollar’s sell off on Friday as economic growth slowed in the United States over the second quarter, this has raised the likelihood of more policy action by the Federal Reserve Bank (Fed) this week and has created speculation of co-ordinated global central bank action as the Bank of England and European Central Bank also meet this week.
The lower growth figures also mean that the concerns the Fed had over economic stability are seen as justified ahead of the major employment figures being released this week. Wednesday, Thursday and Friday have US employment figures being released with the Non-farm payrolls on Friday being the most important of the three events.
UK mortgage approvals and CBI distributive trades data is being release from the UK today while for Europe consumer and business sentiment figures are expected, there is no US data scheduled for today.