Judgement day for US Dollar

Second quarter US GDP figures are due today at 1.30pm UK time. This will be an essential indicator to markets of how the economy has performed over the last quarter and could cause potential volatility with the Dollar and main trading counterparts. For any US Dollar transfers it is advisable to speak with your Currency Solutions broker today to see how the data releases, including GDP and consumer sentiment, may affect you.

Pound Sterling – UK Markets

The Pound is still displaying hardiness; shrugging off yesterday’s weaker than expected mortgage data, a fall in house prices and low consumer confidence figures for July. BA has revealed a total quarterly loss of a further £164 million due to cabin crew strikes and disruption caused by the volcanic ash cloud. There are no key UK data releases due today, so movement will most likely be affected by broader market themes as markets await the US GDP figures for the second quarter. The Pound may once again find itself caught in the cross fire between the Dollar and Euro.

US Dollar – US Markets

It’s likely to be another dark day for the US economy as the crucial Q2 GDP figures will be released later. The figure is expected to come in at around 2.5 percent – should the actual figures underachieve by coming in at anything significantly less than 2.4 percent, economists predict that investors could return to risk-aversion choices. The US Dollar would also no doubt continue to weaken. Yesterday’s weekly US jobless figures came in minimally better than expected at 457,000 rather than the anticipated 460,000. Moody’s rating agency have also added fuel to the fire by suggesting in an interview yesterday that the US needs to re-think its approach for tackling the budget deficit, or start to face the threat of losing its triple AAA rating.

Euro – European Markets

The Euro has continued to make gains on the unhealthy US Dollar. It also gained on the Pound during the second half of Thursday but so far today is losing ground. Unemployment data for June has showed no change at 10 percent. Yesterday’s announcements of the strong earnings of several key European companies have helped boost the Euro along with continuing risk appetite. Consumer confidence also increased to high levels – beating a forecast of 99.1 to come in at 101.3.

Other Currencies – Highlights

The Japanese Yen is in the spotlight. The Yen has risen to its strongest level this year against the Dollar and is also gaining on the Euro. The currency has in fact experienced some negative data with an unexpected fall in industrial production and an increase in unemployment so appears to be strengthening on the back of US woes rather than internal strength. Today’s US GDP figures may determine how long that will last. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000.