Phil Bennetts

Currency Market Update 10/09/09



Posted: Thursday, September 10, 2009

by
Foreign Exchange Explained

The Pound declined against the Euro while making gains against the Dollar as traders pared back positions ahead of today MPC rate decision. Risk appetite and general USD weakness is providing support but the Pound is losing ground on many crosses as it fails to match gains. Also to note UK Aug Nationwide house prices rose 1.6%, the fastest monthly gain since December 2006. Prices are now just 2.7% lower than a year ago and have been rising steadily since February.

The Dollar declined against the Pound and the Euro as Asian asset management funds and short-term players sold the U.S. unit on mounting concern that the country's economic recovery may be slower than expected. Those fears, triggered by a Federal Reserve report released overnight, prompted Asian players to get behind the dollar-selling that predominated in New York trade. Also to note the Fed's Beige Book report drew attention to flat retail sales despite government purchase incentives, and further clouded expectations for the bank to raise interest rates in the near-term..

The Euro made gains against the Pound and continues to hold near its highest levels of the year while the dollar remained on the defensive as investors continued to favor riskier assets.

Data released 10th September 2009

UK 12.00 BoE Policy Announcement 0.50% 0.50%

US 13.30 Weekly Jobless Claims (w/e 5th Sept) 570,000 560,000

US 13.30 External Trade Balance (July)

Phil Bennetts
Currency Exchange Service
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