EUR/USD Performance Chart (03/09/10 12:00)
| Daily % Chg |
0.19% |
|
3 months |
7.77% |
| 1 week |
0.68% |
|
6 months |
-5.69% |
| 1 month |
-2.36% |
|
1 year |
-9.91%
|
Details
| Prev close |
1.2825 |
|
|
52 week high |
1.5144 |
| Last trade |
1.285 |
|
|
52 week low |
1.1877 |
| High |
1.2854 |
|
|
Low |
1.2809 |
Bloomberg Median Forecasts
| Q1 2010 |
1.39 |
|
Q3 2010 |
1.25 |
| Q2 2010 |
1.25 |
|
Q4 2010 |
1.25 |
|
|
|
Commentary
EUR/USD was little changed this morning as investors were hesitant to move this currency pair ahead of this afternoon’s US employment data. The euro received a mild lift following a slight increase in the Purchasing Managers Index for services across the euro region while year-on-year retail sales increased by 1.1%. The bias at the moment for EUR/USD is on the upside as European equity markets are higher this morning which suggests investors are willing to take on a bit of risk. However, that could change quickly this afternoon following the release of the US non-farm payroll data. Expectations are for total jobs to decrease by 105,000, primarily due to jobs lost following the US census. The important number to keep an eye on will be the private sector payrolls, which economists have predicted will rise by 40,000. If more jobs are added than forecast this is likely to spur risk appetite and drive EUR/USD higher. It is more difficult to determine what will happen if the jobs data disappoints. On the one hand the US dollar may benefit from its perceived safe-haven status, however, investors could also dump the dollar over real concerns on the health of the US economy and the prospect of an even longer low-interest rate environment. David Choe, London
GBP/USD Performance Chart (03/09/10 12:00)
| Daily % Chg |
0.04% |
|
3 months |
6.49% |
| 1 week |
-0.79% |
|
6 months |
1.78% |
| 1 month |
-3.00% |
|
1 year |
-5.32%
|
Details
| Prev close |
1.5401 |
|
|
52 week high |
1.6878
|
| Last trade |
1.5407 |
|
|
52 week low |
1.4231
|
| High |
1.5451 |
|
|
Low |
1.539 |
Bloomberg Median Forecasts
| Q1 2010 |
1.60 |
|
Q3 2010 |
1.52 |
| Q2 2010 |
1.47 |
|
Q4 2010 |
1.51 |
|
|
|
Commentary
Sterling pared earlier gains against the US dollar to trade near its previous close at $1.5400. Confidence in sterling was hit after a report showed growth in the services sector easing in August. According to Markit and the Chartered Institute of Purchasing & Supply (CIPS), the Purchasing Managers Index (PMI) for services fell to a reading of 51.3 in August from 53.1 the previous month. The slowdown in growth was more than the 52.9 reading that economists surveyed by Reuters were forecasting. Earlier in the week , Markit and CIPS released the PMI for manufacturing and construction which both came in below expectations. The three reports combined point to a contraction in domestic growth and suggests that the UK economic recovery may be losing momentum in the current quarter. Chief Economist Chris Williamson noted ‘Our model based on the three PMI surveys up to August is signalling a GDP increase of 0.5% for Q3, meaning the second quarter 1.2% surge in GDP will represent a peak in the recovery cycle.’ [1] Despite the signs of weaker domestic growth, GBP/USD could rise if the rally in equities continues, which may be affected by this afternoon’s US non-farm payroll data. David Choe, London
USD/JPY Performance Chart (03/09/10 12:00)
| Daily % Chg |
0.30% |
|
3 months |
-7.49% |
| 1 week |
-0.81% |
|
6 months |
-6.37% |
| 1 month |
-2.02% |
|
1 year |
-8.34% |
|
Details
| Prev close |
84.28 |
|
|
52 week high |
94.99 |
| Last trade |
84.53 |
|
|
52 week low |
83.6 |
| High |
84.53 |
|
|
Low |
84.17 |
Bloomberg Median Forecasts
| Q1 2010 |
91.00 |
|
Q3 2010 |
88.00 |
| Q2 2010 |
93.00 |
|
Q4 2010 |
90.00 |
|
|
|
Commentary
The US dollar strengthened against the yen this morning over improved risk appetite. With Asian stocks closing higher this morning and European equities broadly stronger, the yen pulled back as investors were willing to put their money to work and take up positions in more risky assets. The pressure continues on the Japanese government to intervene in the currency markets to stem the yen’s rise, however any action is now considered futile unless there is a coordinated approach among the developed nations to control the exchange rate. It seems unlikely that other nations would be willing to assist Japan as they have their own domestic growth issues to deal with and keeping their currency as low as possible is in their interest in order to support export demand. As a result, USD/JPY is likely to continue being dictated by risk sentiment in the short-term, which appears to be improving following better-than-expected economic developments from the US this week including a rise in manufacturing growth and improved pending home sales. In this regard, the US payroll data this afternoon will play an critical role in determining risk tolerance in the near-term. David Choe, London
Notes:Source: [1] Markit Economics website (3 September, 2010).Chart data sourced from Bloomberg. Bloomberg Median Forecasts are produced by Bloomberg by taking the median level from rates forecast by a number of contributors. These contributors consist of leading banks and security firms.
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