- Slide in consumer confidence and PMI hits USD
- Improved consumer confidence and housing boosts GBP
So we start the penultimate
month of the year with US political slagging, with Senator John Kerry
says that those who do not work in school “get stuck in Iraq” and
President GW Bush says the troops are “plenty smart and plenty brave”.
Mr Kerry missed the fact that if you don’t work on your grammar at
school, you risk becoming President. Mervyn King, the head of the Bank
of England was also speaking yesterday and he says that another UK
interest rate hike is not a done deal. So those who are buying the
Pound furiously after yesterday’s positive UK house prices data and
improved consumer confidence may be wary of getting much more heavily
into Sterling ahead of next week’s Bank of England interest rate
decision. Those same traders were happy to sell the US Dollar after
poorer US data but they boxed shy of the Euro after mixed Eurozone
numbers and ahead of tomorrow’s ECB interest rate decision. Today will
be a US data story with
little else of interest to stir traders’ blood and the general
perception is that the US numbers will be marginally US Dollar
positive. Have a great day, enjoy the autumn sunshine and prepare for
the busier day tomorrow. However, if you are in need of US Dollars,
read the section below. And watch out for people pinching and punching
and white rabbits and all that.
Sterling made great headway
against the Canadian Dollar yesterday, breaking above a fairly solid
resistance level and heading for the best gain we have seen since the
beginning of September. The news from this side of the North Atlantic
was pretty positive and the fact that the oil price failed to sustain
its recent rallies hampered the Canadian Dollar. The fall in the value
of the CAD came on the same day that an upturn in Canadian economic
growth was announced and that made the GBPCAD rally even more
surprising. The target for this push is around C$2.16 and the threat of
the markets taking Mervyn King’s warning to heart may well keep this currency
pair in that range. A correction from here would bring us back down to
C$2.10 but as long as the rate stays in this range, an upward trend is
intact. However, the commodity influence on the CAD and uncertainty
over the path of UK interest rates makes this a very
volatile pair and all forecasts have to come with the caveat that any
change in the commodities markets or the prospects for the US economy,
can and will change the outlook for the Canadian Dollar.
The data was rather poor for
the US Dollar yesterday. A slide in US consumer confidence was slightly
outweighed by the upwardly revised figure from the previous month but a
very sharp fall in the well respected Chicago Purchasing Managers Index
sent a shudder through US traders and created an ideal environment to
sell USDollars. Sterling pushed higher against the USD and looks very
bullish this morning, although the $1.91 level is proving to be a tough
nut to crack. GBPUSD hasn’t been through this level since march 2005
and that was at a time when it was falling from the heady heights of
$1.94 and $1.95. It would be a brave trader who would gamble everything
on it hitting those levels in the immediate future with GBPUSD looking
rather overbought on the relative strength indicators and with the
nervousness around yesterday’s comments from Mervyn King. However, if
GBPUSD can stay above $1.90 for a few more days,
there could well be a spike higher before the correction which is so
overdue. Miss it and miss out as they used to say on Saturday morning
TV so give your FX Dealer a call to discuss targeting higher exchange
rates.
Me fail english? Thats unpossible.
Ralph Wiggum (as penned by Matt Groening)
FX Research and Analysis undertaken by:
David Johnson - Halo Financial
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