British Pound Sterling
Cable losses have been seen amidst concerns over Greece’s debt restructuring programme and the deteriorating outlook for the global economy.
Yesterday saw Sterling start the day on the back foot with UK house growth weakening slightly in February coming in 0.8 % below the forecast figure 0.3 %. Data was thin on the ground after this release and all eyes then turned to Greece and the latest regarding the debt swap that is due to be completed tomorrow.
A lack of a deal on Thursday has already started chatter about a Greek default. The market is in a risk off environment due to this and investors are seeking safe assets until more reassurance is given that the deal will be done. The USD has gained across the board and GBP/USD opens this morning at 1.5738.
– We expect a range today in the GBP/USD rate of 1.5660 to 1.5820
A lack of domestic data yesterday meant Euro movement was dominated by the Greek latest. Rumours did the rounds early yesterday that there may be a delay on the PSI deadline till next Wednesday from this Thursday. This hit the Euro hard and despite the rumours being squashed and the date being confirmed as February the 8th, the damage had already been done. Markets wait in anticipation at tomorrow’s debt swap deal awaiting Greek private creditors’ participation in the exchange.
Despite large bondholders already agreeing the exchange, it has been rejected by a clutch of Greek pension funds. Once again the two ugly words “messy default” has been used to describe a negative outcome of tomorrows debt swap. EUR/USD is back down at 1.3140 on the back of this and is likely to see many gains unless we are given more of an indication on tomorrow’s outcome. GBP/EUR remains range bound and opens the lower side of recent ranges at 1.1978.
– We expect a range today in the GBP/EUR rate of 1.1950 to 1.2030
Australian Dollar and New Zealand Dollar
The Aussie and Kiwi joined the majority in the losses against the US Dollar Tuesday. As mentioned above, investors using the USD as a safe haven currency played a massive part in this.
Yesterday’s commentary briefly ran through the RBAs rate announcement and the negative effects it had on the AUD and NZD, well overnight saw more fuel being added to the fire that the reserve bank will cut interest to bolster demand. This came as Australias GDP slowed only expanding 0.4 % from a predicted 0.7 %. This has brought the Aussie lower and saw it fall to a Tuesday low 1.0511 versus the Greenback.
A recovery has been seen since this fall, but AUD/USD remains low at 1.0570 this morning. NZD/USD opens this morning at 0.8175. Sterling has failed to advance against the antipodean currencies and begins the day at 1.0572 versus the Aussie and at 1.9252 versus the Kiwi. Domestic data in both Australia and New Zealand will likely have a play on the local currencies tonight.
– We expect a range today in the GBP/AUD rate of 1.4760 to 1.4990
– We expect a range today in the GBP/NZD rate of 1.9140 to 1.9430
Today’s data releases:
- AUD: Employment Change, Unemployment Rate
- EUR: German Factory Order m/m
- GBP: No data due for release today
- NZD: Official Cash Rate, RBNZ Press Conference, RBNZ Rate Statement, RBNZ Monetary Policy Statement
- USD: ADP Non-Farm Employment Change, Revised Nonfarm Productivity q/q, Crude Oil Inventories
By Alex Hartley: Corporate Dealer at UKForex
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