Currency Roundup..

   The dollar traded mixed on Thursday despite positive data showing a better than expected fall in the number of people claiming unemployment benefit. Initial Jobless Claims for week ending the 21st August and Continuing Claims both fell, with Initial Claims falling back below the 500k mark to 473k when 485k had been analyst’s consensus forecast. The Federal Reserve’s imminent symposium in Jackson Hole, Wyoming is also thought to have steadied the markets as the expectation is for an agreement by the international central bankers gathered there of further stimulus measures to support global growth. At midday GMT the dollar was trading at $1.2704 to the euro and $1.5533 to the pound.

   After yesterday’s turnaround rally, the euro began to fall a little this morning amidst mixed data and in the aftermath of the Irish debt downgrade, although the impact on the markets was limited. Sentiment had still stabilized compared to the panic at the start of the weak and data showed German Consumer Confidence was up from 3.9 to 4.1 - above estimates of 4 – although Italian Consumer Confidence was down from 105.5 to 104.1 with estimates of 105.3. At midday GMT the euro was trading at $1.2704 to the dollar and £0.8178 to the pound.

   The pound rallied yesterday as sentiment improved and fears of a global economic double dip recession start to dissipate. This morning, however rates again rolled over and began to slide. On the data front the CBI Reported Sales showed an increase in consumer spending, up from 33 to 35, way above estimates of a fall to 18. A string of positive data results has started to reverse sentiment against the pound after the dovish official comments last week and the ambivalent stance of the BOE. At midday GMT the pound was trading at $1.5533 to the dollar and ¥131.36 to the yen.

   Political turmoil in Japan took the sting out of the yen’s advance after Prime Minister Kan’s leadership came under attack when a member of his own party decided to stand against him the coming elections in September. Kan’s leadership has been criticised for not doing enough to stem the supposed slide in exports caused by an overly strong yen. At midday GMT the yen was trading at ¥84.57 to the dollar and ¥107.44 to the euro.

Analysis prepared by:

Joaquin Monfort
Forex4you analyst