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Pounds Dollars Currency News Archives.

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Dollar loses ground as flight to safety pulls back.

The dollar traded down yesterday after a good start as some of the unwinding of riskier global plays stopped and reversed. The dollar had a general downtrend over the course of the door touching a peak of 2.0320 on cable and scraping just above 1.37 against the Euro.
Credit market worries linked to sub-prime mortgages are still worrying traders and investors despite reassurances from the Treasury that the sub-prime problems do not pose a macroeconomic risk. This comes as a Boston based hedge fund are rumoured to have lost half of their $3bn capital and are about to wind down both funds.
Eurodollars are pricing a 0.25% by year end however all things remaining equal this should be priced out.
Plenty of data to pour over today with the highlight being the PCE deflator and core readings.

Monday 30th July 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0233

Dollar rallies sharply as global volatility rises.

The dollar managed to rise again on Friday despite the sub-prime worries in the US. Global volatility was rising and eventually the stock markets drifted sharply lower as sub-prime worries spread across the globe becoming less localised in just the States. The usual pattern of risk aversion and flight to safety buying saw the greenback rise against both sterling and the Euro.
Despite the current bullishness around the dollar it is worth noting that the chances of a US rate cut by December now stand at 50% rising from 27% a week ago. Both bond and equity markets still look very volatile.
This morning cable is trading just above 2.02 having almost broken through and the euro-dollar is trading in the mid-1.36’s. Nothing on the data front today and no Fed speakers are scheduled so we may see a day of consolidation in the US currency market.

Friday 27th July 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0349

US Dollar:
The greenback remains buoyed in early Friday trading, holding onto its previous session’s gains against the Euro and sterling. The yen also continues to trade near its highs against the majors following the steep sell off in the global equity bourses from the previous session, as heightened risk aversion remains a prime catalyst in carry trade unwinding. Lingering fears of a credit crunch and its detrimental impact on global financial markets have prompted investors to dump equities in favour of US Treasuries. This creates strength for the US DOLLAR with US treasuries being an attractive buy, price in US DOLLAR. Short term our view is for further USD strength down towards 2.0200 level with new highs being achieved medium term towards 2.07 / 2.08.

Thursday 26th July 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0508

US Dollar:
Eventually the dollar managed a sharp rally yesterday following the recent heavy pressure seen on the currency markets. The move came in the early European session as the Euro-dollar broke through stops under 1.38 taking out outright orders and option barriers. The move comes towards the end of the month where many major institutions and multi-national companies look to square their month-end books and are showing heavy losses on the dollar being short cable around the 2.02 level.
Yesterday the Beige Book moderated which helped stabilise the dollar after a brief sell-off following very weak oil data mid-afternoon.
This morning the dollar is looking strong and according to technical's, set to rally. On the data front today we have more home sales data and Durable Goods.

Wednesday 25th July 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0637

US Dollar:
The dollar has started the day poorly yet again this morning. After a brief relief rally yesterday on sinking Tbond prices the dollar has again slipped breaching 2.06 on cable. Yesterday after a poor start the dollar trimmed early losses and managed to post some gains. Again the overriding tones in the market are all based on sub-prime default worries despite assurances from Treasury Secretary Paulson that the problems are ’quite containable’ and that the fundamentals of the US economy are strong, referring specifically to the consumer.
This morning cable is trading around the 2.065 mark and Euro-dollar is still trading near all-time highs. Data today is thin on the ground from the US with nothing due until 1500 when we see the Richmond Fed Manufacturing Index and then the ABC Consumer Confidence figure after the close. Greenspan to speak today.

Monday 23rd July 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0587

Dollar under yet more pressure on sub-prime debt worries

Yet another poor session for the dollar on Friday with more and more pressure being heaped upon the beleaguered greenback.
Cable started the day under 2.05 but rallied throughout the trading day with the real pressure coming as Bernanke warned of huge losses (up to $100bn) on defaults from sub-prime mortgages and warnings that more products may be downgraded by credit agencies.
This morning cable has popped up from the closing price and has printed above 2.06. Euro-dollar is again approaching the all-time high of 1.3847. It is worth noting that an ECB member commented that the weak dollar reflected the current weak state of the US economy.
Nothing due for release from the US today however rumours and comments about the credit market may well fly about the market today.

Friday 20th July 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0519

Dollar remains weak against Euro and pound

The US markets have shrugged off the Sub-Prime worries with the Equity markets taking heart from robust earnings reports.

The Dow Jones index closed above 14,000 for the first time. On the Forex front the good old Betty Grable fell back from the high of $2.0540 as profit taking arrived after the lower economic data and we could see a little more profit taking ahead of the weekend.

The minutes of the last FOMC meeting (released late yesterday) were in line with expectations, showing the central bank voicing concern over a lack of convincing evidence that the recent moderation in core inflation would be maintained. There were also no surprises in Bernanke’s repeated testimony to congress, though the dollar did get a bit of a lift versus the yen when he remarked that the Fed did not see any need for any policy changes by the Bank of Japan with regard to its currency.

Thursday 19th July 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0536

Dollar mounts small comeback before being squeezed back

A mixed bag for the dollar yesterday following a poor start. After initially trading up to 2.0549 on cable the dollar pushed back under the 2.05 level and under 1.38 on the euro with some profit-taking and buying into the dip. The dollar was helped by Fed Chairman Bernanke explicitly stating that inflation was still high on the Fed list of priorities.
The dollar then suffered losses as rumours hit the market that another bank, Lehmanns, had suffered heavy losses on the sub-prime market. This fuelled talk that more banks may have troubles but have not stated them as yet. Lehmanns were quickly out of the blocks to deny the rumours but the dollar remained pressured
Plenty of bits and bobs from the States today however the spotlight will be on the Fed minutes which are due this evening. The data highlight will be the Philly Fed Index.

Wednesday 18th July 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0534

Dollar smashed as cable goes through 2.05

Another very poor day for the dollar yesterday first coming under pressure from the UK and then US numbers not helping out the ailing greenback. The dollar sustained some fairly heavy losses on cable in early trade but stood up fairly well against the other majors. US PPI data did manage to surprise to the upside however the dollar negative sentiment crept back in with poor confidence data. Last night after the New York close Bear Sterns announced that two hedge funds it runs that made big bets in sub-prime mortgages have been almost wiped out. The sub-prime market is now causing some concern with Wall Street circulating a list of sub-prime bonds it wishes to sell hastily.
The upshot was that cable broke through the 2.05 level this morning and Euro-dollar is again through 1.38.
US CPI due to tick up today so we should see a very volatile session.

Tuesday 10th July 2007 Interbank
G BRITISH POUND / US DOLLAR 2.0138

Dollar starts well this morning eking out some gains
 
As expected a quiet day for the dollar and US markets with no data to provide any direction. Cable did man- age to pop back up to the mid 2.01 range however Euro-dollar traded in a narrow band yesterday.
Borrowing figures by US consumers rose more than forecast a Fed survey showed. In the face of a weakening housing market US consumers are financing their spending by racking up larger credit card bills. Non- mortgage loans rose by an annualised 6.4% to $2.44 trillion. This is unlikely to cause the Fed to cut rates any time soon.
This morning the dollar has started well with Asian demand driving the greenback higher. Cable has dropped off by about 20 pips and Euro dollar is again testing the 1.36 level. Stateside today we have Wholesale Inventories at 1500BST and ABC Consumer Confidence at 2200BST.

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