Daily Market Brief – 22nd July 2015

Your Daily Currency Brief

Quote of the day: “Muddy water is best cleared by leaving it alone”

July 21st: Highlights

  • BoE minutes released
  • GBP/USD up nearly a cent
  • GBP/EUR slips below 1.43 mark
  • Greek parliament to vote on austerity today
  • EUR/USD snaps a six day losing streak

Sterling Comment

Yesterday George Osborne talked through his budget with the Treasury Select Committee, but this threw up little reaction in the market. The public borrowing numbers was forecasted to drop to an £8.5bn deficit, but a report showing the true deficit closer to £9.5bn, which was enough of a catalyst for Euro profit taking and Sterling lost ground against most counterparts. A little recovery this morning shows GBP/EUR currently trading around 1.4265.

With no major economic data released, Cable traded fairly flat yesterday, but Sterling has picked up ahead of the Bank of England meeting minutes this morning. There is growing interest in how hawkish the tone might have been, following Mark Carney talking up a rate hike last week. Rates have driven higher on the open and currently Cable is around 1.5625

Greece clears their tab

The IMF has confirmed that Greece has paid overdue debt repayments and is no longer in arrears. So having paid a few bills and cleared the (overdue) tab, where are we up to now? Across the month of August, Greece have a total of a further €5bn of payments due to creditors. And guess what? They don’t have that much money yet. This means that they will need to have a full agreement in place, to access funding lines from a third bailout, or be sufficiently far enough progressed to receive another bridging loan. Parliament will vote on austerity measures today

Ratings agency, S&P, improved Greece’s rating from negative to a stable CCC+ and stated that the countries liquidity perspective has improved. They also noted that the chance to default on more debt this year is ‘minimal’.

European supporter can relax a little on a report from Spain that suggest Podemos, (Spain’s version of Greece’s Syriza) has lost support. Understandably, voters fear a similar ordeal to the Greeks, if Podemos came to power and followed Syriza’s hardball with the Eurozone. It looks like the Greek capital controls helped cause ‘just enough’ pain to send a message to Spanish voters.

GBP fell yesterday against the Euro from a session high of 1.4393 to lows of 1.4214, helped by the IMF bailout for Greece. It is now trading around 1.4280.

If you are a Euro buyer or seller, log on to compare live quotes at this volatile time OR get in touch with your Personal Currency Concierge. It pays to let us shop around for you.

Global Comment

EUR/USD moved from 1.0820 through to 1.0960 on the close. Dollar weakness was caused by some weaker than expected corporate earnings releases that, due to the lack of economic data, helped question the potential for a September rate hike.
Data due out today will give the USD a chance to regain control. Existing Home Sales is the main Housing Data and growth of 1.2% is forecasts at 5.4m (5.35m last month).

Today is a key day in the economic calendar. Investors will keep a close eye on the claimant count change and interest rate vote for MPC members.

The Reserve Bank of New Zealand announces their rates decision tonight. Expectation is for them deliver a rate cut from 3.25% to 3.00%, despite comments from the PM suggesting the NZD had gone too far to the downside.

The Reserve Bank of Australia has reiterated once again that a lower currency is required to achieve balanced growth. GBP/AUD is currently trading at 2.1030, with GBP/NZD at 2.3565.

Have a great day!

Morning mid-market rates – The majors
48-GBP GBP > USD 147-USD = 1.5625
48-GBP GBP > EUR 45-EUR = 1.4270
45-EUR EUR > USD 147-USD = 1.0930
45-EUR EUR > GBP 48-GBP = 0.7007

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Paul Plewman
Director of Sales & Operations
t: +44 (0) 20 7096 1036
e: paul@currencytransfer.com

Paul Plewman, Director of Sales & Operations, has over 10-yrs experience in International Payments before joining the CurrencyTransfer.com team. Follow Paul on Twitter @fxplew

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