Daily Market Brief – 27th July 2015

Your Daily Market Brief

Quote of the day: “A smooth sea never made a skilful sailor”

July 27th: Highlights

  • Sterling drops through EUR 1.40 on the open
  • Greece bailout talks rescheduled
  • Germany pushing for further ‘prior actions’
  • New US home sales fall to 7 month low
  • AUD falls lower than SGD for first time since 2009

Sterling Comment

GBP/EUR is trading around 1.4015 this Monday morning. Last week, the pair fluctuated in a wide range, between 1.4412 – 1.4086, as the situation in Greece is no longer be on red alert and UK retail sales data showed a significant decline in consumer spending.

Paul Hollingsworth, of Capital Economics, suggests that the softer retail data commented, ‘does not alter the big picture that the consumer recovery remains in full swing’ and believes the Q3/Q4 prospects in the UK are bright. ONS data, due out tomorrow, is expected to show the UK economy bounced back in Q2 and a strong growth figure is likely to add weight to the BoE rate discussions.

GBP/USD is trading in the region of 1.5510. The pair was trading at 1.5519 late last Friday, pretty much unchanged for the day and up from a session low of 1.5467. The US Dollar was trading down after data showed new US home sales fell to seven month lows in June.

Sterling exchange rates could challenge recent highs again if data can excite investors.
This week, keep an eye out for:

  • Q2 UK economic growth
  • Nationwide House Prices
  • Mortgage Approvals
  • The GfK Consumer Confidence survey

Greece

The Euro remained supported following an unexpected delay in talks on a new bailout package between Greece and its creditors. A new agreement must be signed before the 20th of August when Greece needs to repay more than 3 billion Euros to the ECB. Talks are scheduled to crack on again tomorrow.

The Greeks are nervous and will try to resist any additional reforms, arguing that the measures that were agreed should be all that’s needed for the first tranche of aid. “This, at present, is the big, fat, issue,” said a Greek official close to the talks. “They do not want to understand that there will be yet another significant package of ‘prior actions’ before any disbursement. They already have implementation fatigue after two mini-bills.” Germany is the major Eurozone country pushing for these ‘prior actions.’

Domestically, Greek PM Tsipras is under pressure to explain reports suggesting that members of his party planned to return to the Drachma. Former FinMin Varoufakis has also been pulled into this, with suggestion he prepared plans to copy online tax codes, to enable the government to introduce a parallel payment system if the banking system was closed down. Naturally, these reports have been denied.

Global Comment

Noteworthy US data, which could affect US Dollar exchange rates this week:

  • Durable Goods (Monday)
  • Consumer Confidence (Tuesday)
  • Pending Home Sales (Wednesday)
  • Second Quarter Growth and Initial Jobless Claims (Thursday)
  • Consumer sentiment report (Friday)

The ZAR was the biggest loser, falling to fresh all-time lows, hit by the glut in commodity prices and gold.

Next from the bottom was the Aussie Dollar, which weakened below parity against the Singapore Dollar for the first time since 2009. The AUD has taken a battering by a slowdown commodity exports, together with a string of lower than expected data releases.

Have a great Monday!

Morning mid-market rates – The majors
48-GBP GBP > USD 147-USD = 1.5480
48-GBP GBP > EUR 45-EUR = 1.4145
45-EUR EUR > USD 147-USD = 1.0945
45-EUR EUR > GBP 48-GBP = 0.7069

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Paul Plewman
Director of Sales & Operations
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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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