Pounds Dollars Exchange rates Decemeber 2007

Pounds Dollars Currency News Archives

Monday 31st December 2007 Interbank
G BRITISH POUND / US DOLLAR 1.9973

Dollar takes on further losses as new home sales hit 12 year low

Cable briefly pushes through 2.00 as euro-dollar breaches 1.47

US Dollar:
The US dollar weakened further on Friday after yet more negative data from the housing market in the States. New Home Sales data showed that more and more new houses are standing empty following the tighter requirements for lending criteria show more and more applicants are being turned down for mortgages . Existing Home Sales are expected to improve today but these figures have a larger downside than they do upside given the state of the market at the moment.

Cable briefly broke through the 2.00 barrier however pulled back sharply following a failure to make a convincing break. Euro-dollar continued to rally taking out the 1.47 barrier with ease and holding firmly above.

This morning should be quiet with no major news to report and a very quiet open. Europe is either shut or on a half day and in the States Chicago is open.
 

Monday 24th December 2007 Interbank
G BRITISH POUND / US DOLLAR 1.9814

Dollar remains strong against GBP

US Dollar:
Middle America is experiencing the most severe financial hardship for more than five decades, a Harvard University academic has claimed. in the worst financial squeeze since the 1950s, with soaring health insurance costs, the housing recession, rising childcare fees and the increasing likelihood of caring for an elderly parent. Edward Wolff, a professor of economics at New York University, said that the financial hardship experienced by Middle America had worsened rapidly during the Bush Administration. “Americans have been trying to keep up with their usual consumption by taking money out of their homes. Household debt has really zoomed up since 2001.”
 

Friday 21th December 2007 Interbank
G BRITISH POUND / US DOLLAR 1.9840

Dollar continues to rally as confidence regains
Fed offers $20bn in an effort o relax money markets

US Dollar:
The dollar continued to rally yesterday as cable dropped under 1.98. The dollar rally is unsurprising however the markets may be slightly over-bullish considering that the knock-on effect from the sub-prime debacle are likely to feed down to bond insurers. The larger institutional positions with banks are going to be insured and the losses look likely to cripple the cash-heavy firms and have a big effect on the stock indeces.~

The Fed continue to offer liquidity into the market with injections this week bringing the total to something in the region of $20bn.

The Fed are likely to continue cutting however inflation will remain on the mind of the Fed voting members with oil prices remaining above $90.

Core PCE is the choice figure today.
 

Thursday 20th December 2007 Interbank
G BRITISH POUND / US DOLLAR 1.9928

Dollar support remains strong as safe-haven currency
Cable drops below 2.00 for first time since September

US Dollar:
The dollar remains very well bid as confidence returns to the US markets. With a lot of the sub-prime problems exposed in the US already the dollar looks to be once again the safe-haven currency of choice. The dollar gained further support from the fact that central banks across the globe are now beginning to feel the knock-on effects from the US problems in Q3.

The Fed’s Lacker said overnight that he is ‘comfortable’ with the current interest rate policy easing but is ‘uncomfortable’ with the inflation outlook.

Yesterday cable dipped below 2.00 for the first time since September this year on the back of poor UK performance and continued dollar support.

Today we have GDP, PCE, Initial jobless claims and Phillie Fed to look forward to.
 

Wednesday 19th December 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0170

Dollar rallies again as banks feed in liquidity

US Dollar:
The dollar ticked higher marginally yesterday with confidence returning to the US. Markets are slightly on edge with reports that a bond insurer may have to be bailed out after guaranteeing something in the region of $26bn in mortgage backed bonds.

Treasury Secretary Henry Paulson said in Kansas City yesterday that the Bush administration expects the housing downturn to continue for some time to come yet and will have a ‘penalty on short-term economic growth’. Given that much of this has already been priced into the dollar market there was not a hint of a reaction of the back of these comments.

Mortgage applications is the primary release of the day in the States today however two Fed members, Paulson and Lacker are set to speak late afternoon.
 

Tuesday 18th December 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0194

Dollar falls away from highs on profit-taking
US-denominated assets seen as ‘value’ with weak dollar

US Dollar:
The greenback dipped slightly yesterday following the strong rally seen since Thursday last week. A small hiccup in the stock markets caused a wave of profit taking from the speculators long the dollar before the rally. The US Q3 current account deficit also narrowed data showed yesterday.

Looking at the overseas bond-holding data yesterday it looks like the recent weakness in the buck has led speculators to believe that the dip afforded an opportunity to buy up assets with good value.

The recent rise in inflation is also another driving factor behind the dollar rally with chances of the Fed cutting further decreasing as the Fed keep on talking about controlling inflation. Cable also bounced off a strong technical level yesterday.

Housing starts and Red Book from the States today so not heavy on the data front.

Spanish mortgage - IMS Mortgage Spain

Monday 17th December 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0182

Dollar rallies on the back of Thursday’s strong data

US Dollar:
The dollar continued to forge higher on Friday following strong Retail Sales and PPI on Thursday. Stops triggered against the euro saw the cross shed over 160 pips before lunchtime in the UK. The move was exacerbated by news that many banks and funds were repatriating money to the US before the end of the year.

This morning the dollar received further support on news that Turkey had carried out air strikes in northern Iraq. There are allegations flying that the US may have had some involvement.

News that a major US-based hedge fund may be in a bit of a pickle following heavy Treasury-based losses could put the brakes on a further dollar rally.
Current account balance is set for release at 1330GMT.
 

Friday 14th December 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0398

Dollar trades higher on technical move

US Dollar:
The dollar rallied nicely yesterday on the back of a break down below 1.47 and strong data. The euro-dollar technical levels proved to be reliable again with the cross smashing through the 1.47 level and breaking out to the downside.
The move came on the back of very strong PPI data and retail sales data. PPI comes as no surprise given the current climate of high oil prices and rapidly rising food prices.

Ex Fed Chairman Alan Greenspan now sees a 50:50 chance of a recession in the US rising from his previous prediction of a 1 in 3 chance.

This afternoon we have US CPI to look at which is expected to come in quite high given the aforementioned moves in commodity prices.
 

Thursday 13th December 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0441

• Dollar slammed as Fed announces liquidity tie-up
• Fed agrees FX swap lines with ECB, SNB and BOC

US Dollar:
The dollar saw a violent swing in fortunes in a 2-hour period yesterday afternoon. A market order buying the dollar pushed cable down 50 pips before the Fed announced that it had made an agreement with the ECB, SNB, BOC and BOE to inject liquidity into a market devoid of money flow. The dollar was hit hard on the back of this news losing over a cent on cable before rallying back to pre-announcement levels.

The Fed is set to inject up to $40bn into the economy in the next 8 days and is also to lend dollars to European dollar-lenders. The last time the Fed did this was just after 9/11.

Plenty to concentrate on this afternoon Stateside with PPI looking to come in unchanged, jobless data expected to fall and retail sales less autos tom come in unchanged.
 

Wednesday 12th December 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0434

Fed opt to cut rates by 0.25%
Door left firmly open for more rate cuts

US Dollar:
At the end of trading yesterday it seemed like some market participants with the 0.25% cut that the Fed implemented with predominantly stock market traders looking for a 0.5% cut. The Fed’s decision to cut by 0.25% was due to ‘slowing economic growth reflecting the intensification of the housing correction and some softening in business and consumer spending’. The Fed did highlight ‘some inflations risks’ which was probably why they didn’t move by 0.5%. The Fed did leave the door open for more cuts.

As a result the dollar came under some selling pressure but not a great deal as the move was broadly priced into the market.

Today we have the trade balance which always makes interesting reading. Given the rally in the dollar the deficit is expected to widen again to -$57.3bn.
 

Tuesday 11th December 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0504

Dollar falls in quiet trade; downside stops triggered

US Dollar:
The market today should position itself for the FOMC decision this evening. The general market consensus is a cut in interest rates of 0.25% in an effort to stimulate a stagnating economy. There are people in the market that are calling for a 0.5% cut and there is a strong case for no move at all given some of the rhetoric of the Fed in recent weeks. The decision is due at 1915GMT.

The dollar fell in relatively quiet trade yesterday with direction being dominated by technical flow. Sterling demand pushed cable higher taking out dollar downside stops which pushed euro-dollar back through the 1.47 level, taking out further stops. Not a huge surprise given the price action at the 1.47 level in the past 2 weeks or so.

Wholesale Inventories this afternoon prior to FOMC; these are set to fall.
 

Monday 10th December 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0400

Dollar remains firm ahead of data-heavy week

US Dollar:
The dollar was quiet on Friday and should remain range-bound ahead of the decision by the FOMC tomorrow evening. Markets are still unsure about what will happen tomorrow with futures markets looking for a cut of 0.25% however Fed members over the last 4 weeks have been talking up the need for the Fed to remain on guard over inflationary pressures which is casting doubt on the decision.

The dollar may come under pressure on the back of comments from Bahrain that Gulf states are to begin talks into revaluations within a matter of days.
The amount of net US Dollar short positions has been cut from 27.1bn to 25.02bn according to the IMM following the sharp rally back in recent weeks.
Pending Home Sales is the only figure today.
 

Friday 7th December 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0234

Dollar remains well bid on flow / demand

US Dollar:
Again another very quiet session for the dollar with the big figure providing the technical mark to trade against. 1 move below 1.46 on euro-dollar saw a sharp sell-off and a failure to break back above saw another sell off keeping the cross below 1.46.

Today we have the all-important Non-Farm Payrolls, the most widely anticipated piece of US data, which is set to come in at the 72k mark which is lower than the previous month however it does still show that the economy is still adding jobs.

The US markets should benefit from a cut in interest rates given their general slowdown however the Fed are still very wary on the threat of inflation.
On top of NFP we have Michigan sentiment this evening.
 

Thursday 6th December 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0278

Dollar rallies on demand following good cable performance

US Dollar:
The dollar rallied strongly yesterday following a strong performance on cable. UK data prompted the start of dollar buying which carried on throughout the rest of the day.

Once again the 1.47 level was a key level on euro-dollar posting sharp losses on a break through the figure, eventually posting a low of 1.4571 in early trade this morning.

An article carried by the Times this morning indicates that Wall St could be facing losses of up to $110bn on the back of sub-prime mortgage backed bonds. The big bond insurers came under pressure yesterday as the ratings agency Moody said that they may be facing a huge shortfall. Despite these warnings global stock markets remain firm.

Not much Stateside today with the action focussed on Europe and the UK.
 

Wednesday 5th December 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0430

Dollar remains fairly stable on most markets; slightly lower for choice

US Dollar:
A fairly quiet day in the markets by recent standards with the dollar relatively unchanged, slightly softer if anything.

Not much on the data front yesterday so movements were generally governed by normal market flow and positioning.

Late on ABC Consumer Confidence fell from –21 to -24 which caused a late sell off in the dollar market but losses were quickly recovered given that the ABC has been negative for a while now and that it isn’t one of the bigger indicators in the US economy.

The US Dollar managed to break back above parity over the Canadian Dollar after the surprise Canadian rate move.

Plenty of minor pieces of data this afternoon with ISM (non-manufacturing) and Factory Inventories probably the biggest two.
 

Tuesday 4th December 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0628

Dollar finds a comfortable range on euro-dollar

US Dollar:
Despite a cable rally the dollar looked to be sitting fairly comfortably following the rally into month end late on last week. Euro-dollar traded comfortably sub-1.47 and even tried a small break above but momentum faltered just above.

Overnight Fed member Yellen made some interesting comments on the December Fed policy however still gave no real clues as to their direction. He said the committee still have a fairly open mind going into the December meeting but events and weak data since October have highlighted downside risks to the US and global economy as a whole. He did say that GDP is only likely to show a ‘meagre’ growth for Q4 however given the level of the dollar exports are booming.

Very little from the States today; Redbook Sales is the choice figure.
 

Monday 3rd December 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0570

Dollar rallies on demand going into month-end

US Dollar:
Another good day for the dollar on Friday with a number of factors acting in favour of the rallying currency. Demand going into the year end by the major institutions is keeping a firm bid under the dollar and on Friday the paring of riskier yield positions also helped the dollar to remain nicely bid on the forex market.

The Qatari Finance Minister said over the weekend that a US Dollar depegging was not on the agenda for Gulf Ministers.

A 0.25% cut in December looks to be a done deal in the futures markets however it is interesting to note that Citibank have revised their forecast and are now predicting a 0.5% cut.

This morning the dollar is slightly negative but nothing to scream from the rooftops about.

On the data front we see ISM (manufacturing) this afternoon and that’s about it for the day.

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