Sterling – A Barrel Down Each Eye

Once again we see sterling struggling against a basket of currencies and in our opinion continues to stare down the barrel of a gun. Going forward we expect much of the same. At the moment there are no real optimistic prospects for our local currency, therefore, if you are looking to sell sterling it may be worth getting it done before things get worse. Perhaps it is time to bite the bullet…

Pound Sterling – UK Markets

Sterling has taken a blow over the last couple of days against both the euro and US Dollar. A report is set to forecast that retail sales fell for the second consecutive month in June. This comes as no surprise as the markets already assumed that a sudden rise in retail sales was the result of the royal wedding bank holiday weekend. However, sterling has now been pushed to its lowest level versus the dollar since April 1st.

US Dollar – US Markets

Federal Reserve Chairman Ben Bernanke has opened the door to fresh shots of monetary easing should the economic recovery in the US fail to take pace as expected. The Fed has predicted that the US will overcome increased energy prices and disruptions in manufacturing due to recent issues regarding Japan. However, areas of major concern still include falling house prices, unemployment and a relatively weak financial system. These issues could topple the scales in such a way that monetary stimulus will eventually be required. So, at least until later in the year, the US has eased fears of monetary easing. Therefore, we could expect the dollar to make strong gains across the board. Given the state of the economy a couple of weeks ago this has come as a bit of a surprise. However, nothing in the FX markets should ever surprise us these days.

Euro – European Markets

The euro weakened against most of its major counterparts (except sterling it appears) as European leaders today embark on a two day summit in Brussels to discuss the ongoing financial issues facing Greece. The aim is to agree on austerity measures required to ensure Greece receives the bailout package required to stave of a potential default. Greek Prime Minister George Papandreou is expected to come up against heavy resistance in trying to persuade parliament to agree to a package of budget cuts and asset sales. Meanwhile, data released this morning showed that purchasing manager index services and manufacturing across Europe, including Germany came in lower than expected. With the manufacturing industry sector dominating a large percentage of business conditions these figures, whilst coming in a little lower than expected are still above 50 which can be seen as bullish for the Eurozone.

Other Currencies – Highlights

The Canadian Dollar continued it’s up and down year as it stayed very weak against its US counterpart. It fell against 11 of its 16 most traded peers and government bonds were little changed. Furthermore, following yesterdays news, Asian currencies continued their decline as the Fed lowered growth forecasts and concern grew over the Greek bailout. Asia-Pacific shares dropped by the most in a week and are set to fall further as European officials meet in Brussels for a two day summit.