Good morning,

 

USD

 

Last Friday was dominated by US data releases with the US personal income which rose 0.1% in September versus -0.1% in August, the Michigan Survey consumer confidence that was revised up to 60.9% in October versus an estimate of 57.5. The main news this morning is the strong intervention from the Bank of Japan in the market to fight JPY strength. The result was a drop in the USD/JPY rate from 75.55 to over 79 and a stronger USD against all currencies. The Japanese authorities stated that this could happen again if they judge it necessary. There are a lot of data coming out this week but focus will be on the FOMC (Federal Open Market Committee) meeting; it will be discussed various possible policy tools to support a stronger economic recovery. It will be followed by a press conference with Chairman Bernanke on Wednesday. Today we shall see the Chicago PMI release and the ISM manufacturing activity report tomorrow which is expected at 52.0 versus 51.6 in September. On Wednesday the ISM’s October report on services business activity will be released but more importantly we will see the unemployment report on Friday, which is expected to remain at 9.1% for the 4th consecutive month and the US non-farm payrolls data, expected at 95K in October versus 103K in September.       

 

EUR

 

Last week, EUR generally strengthened against USD but lost about 0.2% on Friday and finished at 1.4160. It is still the highest level since the beginning of September. The ECB President Trichet commented that the crisis was not over but that it was very important that all EU leaders’ decisions were executed as agreed. However, there is still a lack of confidence in the European currency, with for example Chancellor Merkel who fears that other euro-zone countries would request financial help. It is also still uncertain that private-sector banks will participate in the Greek deal. This week, focus will be on the G20 meeting in Cannes (Thursday and Friday) which should be dominated by discussions about the European debt crisis and potential new roles for the IMF. Today will be released the German September retail sales and the Eurozone CPI data, as well as unemployment data (today and Wednesday) but tomorrow some euro-zone markets will be closed for All Saints Day. ECB monetary policy decisions will take place on Thursday but it is expected that the rate remains at 1.50%. On Friday, the services PMI will be released and it is expected at 47.2, from 48.8 in September.     

 

GBP

 

Friday, the UK GfK consumer confidence fell from -30 in September to -32 in October. GBP found support on Friday at 1.6080 against the USD and even reached a highest level of 1.6150 during the US session but dropped back to 1.6020 this morning. There is not as many data coming out of the UK this week as there are in the Eurozone but the PMI data will be watched closely, October manufacturing on Tuesday and October services PMI on Thursday.   

 

ZAR

 

USD/ZAR has reached the 7.78 resistance and is therefore expected to move lower than what we have seen for the last few weeks. President Jacob Zuma will attend the G20 and will mention the need to act against currency volatility but might not be seen as the most important subject to discuss. EUR/ZAR is trading this morning at about 11 and GBP/ZAR is currently in the 12.50’s. This week, focus will be on the SA unemployment data on Tuesday.

 

Morning Market Rates: (Please note: These are indication prices only, they are not offer rates)

 

GBP/USD: 1.5952

GBP/EUR: 1.1401

GBP/AUD: 1.5127

GBP/CHF: 1.3902

GBP/ZAR: 12.49

GBP/JPY: 124.74

USD/JPY: 77.89

USD/ZAR: 7.8055

EUR/USD: 1.3963

EUR/ZAR: 10.9301

GBP/NZD: 1.9658

GBP/CAD: 1.5927

EUR/CHF: 1.2160

GBP/AED: 5.8616

 

 

And finally...

 

“I'm not afraid of death; I just don't want to be there when it happens.” Woody Allen

Good Morning,

EUR
The debt crisis in the Eurozone continues to dominate market attention, with particular focus on the EU summit which is held on Sunday. Euro is slightly weaker today after a series of important statements from German officials warning against expectations of a resolution. It had been widely epected this week that we were nearing the final stages of agreeing a package for recovery, however, a German government spokesman has stated it would be a 'dream' to expect that everything will be resolved creating negative market sentiment. This had a damaging effect on banking sector shares and dampened risk appetite. There is also more uncertainty in Europe in the build up to Greek austerity votes. We also have Portugal widening their budget deficit forcast and tensions surrounding the introduction of financial transactions tax.
Today's market data:
German business confidence index released today at 10am, expected -44.7. Last month -43.3.

GBP
Underlying confidence in the UK remains fragile following a lowering in growth forcasts from a number of leading institutes, which is preventing the UK currency hold on to gains made against the USD. CPI data released today is expected to show a rise in inflation, possibly above 5.0percent for the first time in more than 3 years. if this is the case Sterling will struggle to hold any support as it looks like the BoE would be unlikely to respond to a poor figure leaving consumers spending power under pressure.
Today's market data:
CPI and RPI released today at 9:30am. CPI expected up 0.4 percent to 4.9 percent. RPI expected to remain at 5.4 percent.

USD
In the only major data release out of the US yesterday the New York manufactoring PMI index dropped to -8.5 from -3.9 the previous month. This is the 5th month in a row the number has remained below zero, reinforcing fears surrounding the US economy despite a small rise in physical orders. There was also talk of extra monetary easing by a Fed member yesterday along with a general lack of appetite for risk which has curbed any losses against the Euro and GBP.
Today's market data:
PPI is expected rise to 0.2 percent for the last month.

Morning Market Rates: (Please note: These are indication prices only, they are not offer rates)
 
GBP/USD: 1.5700
GBP/EUR: 1.1439
GBP/AUD: 1.5426
GBP/CHF: 1.4130
GBP/ZAR: 12.6197
GBP/JPY: 118.21
USD/JPY: 74.77
USD/ZAR: 8.0122
EUR/USD: 1.3633
EUR/ZAR: 10.9856
GBP/NZD: 1.9900
GBP/CAD: 1.6047
EUR/CHF: 1.2265
GBP/AED: 5.7608

And finally...

A man and a friend are playing golf one day at their local golf course. One of the guys is about to chip onto the green when he sees a long funeral procession on the road next to the course. He stops in mid-swing, takes off his golf cap, closes his eyes, and bows down in prayer.

His friend says: “Wow, that is the most thoughtful and touching thing I have ever seen. You truly are a kind man.”

The man then replies: “Yeah, well we were married 35 years.” 

Have a great day.

Good morning.

 

USD

 

Last Friday, the US economic data was stronger than expected with an increase of 1.1% for September in retail sales against a 0.3% gain last month. On the same day, the University of Michigan consumer confidence index slightly decreased but this did not have a significant impact on the market. Over the weekend, US Treasury Secretary Timothy Geithner asked for a stronger policy in the euro-zone and announced that he was not supporting an increase of the IMF lending capacity. Moreover, the US Treasury delayed until later this year its semi-annual report to Congress about global currency policies, there are still disagreements between China and the USA on this subject. This week, focus will be on speeches from Federal Reserve officials, including Chairman Bernanke on Tuesday and the US September CPI and housing data on Wednesday.   

 

EUR

 

On Friday, the Eurozone September CPI was released at 3.0% against 2.5% in August. On the market, the euro rose to 1.388 against the USD so an increase of 0.7% and gained 0.4% against the GBP. This comes from the fact that European leaders might be making progress on the Greek case and the European crisis in general. At the weekend G20 meetings, Euro-zone officials continued to debate policy options but they will need this week to agree on a firm plan to recapitalise banks, expand the bailout fund and adjust the terms of the Greek debt. Investors were reassured that European officials should find a solution to the crisis within a week. President Trichet spoke over the weekend in France and reassured that the euro was not going to fail and that according to him, the euro-zone has issues but will get out of this crisis shortly. However, he did agree with Chancellor Merkel that European texts and policies will probably need to be amended. Generally, we see more optimism in the market concerning the European crisis but the next two weeks will be important: focus will be on the European summit next weekend, the G20 on 3rd and 4th November and mainly on the various meetings this week. We will also see the German ZEW investor confidence index on Tuesday and Greek strikes and austerity votes on Wednesday and Thursday.

 

GBP

 

The UK currency reached the 1.585 level against the USD on Friday, almost the highest rate in a month. However, GBP remained strong, especially after the release of the Rightmove data this morning showing a higher house prices in October. The European crisis still has a very important impact on the UK economy: for example, there was fear that if the IMF increase its support to the Euro-zone, the UK would consequently have to increase its support to the IMF. Therefore, focus for GBP this week will be on the European leaders’ decisions but also on the September CPI on Tuesday – it is expected to increase to the 5% level, against 4.5% in August. We will also see the BoE minutes which will be published on Wednesday, September retail sales on Thursday and public finance and Nationwide consumer confidence figures on Friday.

 

ZAR

 

South African Rand has strengthened last week with a more stable USD/ZAR rate, at 7.80/8 level and we should see a further decrease again this week. However, the European situation will probably paralyse the market and there shouldn’t be too much changes until next weekend. Expectations are a more stable EUR/ZAR rate, at approximately 10.90 and a GBP/ZAR rate in the 12.20 region.

 

Morning Market Rates: (Please note: These are indication prices only, they are not offer rates)

 

GBP/USD: 1.5758

GBP/EUR: 1.1338

GBP/AUD: 1.5207

GBP/CHF: 1.4035

GBP/ZAR: 12.26

GBP/JPY: 122.01

USD/JPY: 77.18

USD/ZAR: 7.7586

EUR/USD: 1.3854

EUR/ZAR: 10.777

GBP/NZD: 1.9539

GBP/CAD: 1.5833

EUR/CHF: 1.2339

GBP/AED: 5.7874

 

And finally...       

“What is a movie star? It is an illusion. It was everything I ever wanted to be, but it became a kind of shell, non? It was what made me famous and got me women. But it wasn't real.”

Jean Claude Van Damme