Morning Report 22.12.2014
Raphael Sonabend, FX Analyst
Level trading and record high sales data suggests that with Christmas fast approaching, traders have stepped away from their computers and flocked to the streets for last minute shopping. UK CBI realised sales data saw the strongest growth in 26 years after prices were slashed around the UK in Black Friday deals. Sales data overshadowed poor Public Sector Net Borrowing, which released a result £7B above the previous. Today’s trading is unlikely to provide much market excitement as the main focus will lie on New Zealand’s trade balance figures at 21:45. As the New Year approaches, assuming that no unexpected data is released, stable trading looks set to continue.
GBP/EUR: Currently trading at 1.2736
Public sector net borrowing failed to see Sterling strength as it registered at 13.4B, which was below the forecast 14.8B; traders focused on the rise from 6.4B. Soon after, CBI realised sales data was released and this allowed the pound to gain against the Euro. Registering at 61, this was the strongest growth since 1988. This significant growth was driven by the increased sales over Black Friday and other pre-Christmas shopping.
Today should not bring any surprises with no data of influence due to be released. Currently trading with relative stability, this level trading is likely to continue throughout the week.
GBP/USD: Currently trading at 1.5628
No US data out on Friday proved beneficial for the dollar as markets focused on an increase in UK borrowing. Cable saw a fall of almost a cent until this pair finally met with resistance at the 1.56 level and began a correction in favour of the pound.
This correction continued through the weekend and into this morning’s session. Today’s trading will focus on US existing home sales data, which is forecast to fall from 5.26M to 5.21M. If these sales figures are in line with predictions then Sterling’s strength is likely to continue.
EUR/USD: Currently trading at 1.2263
The dollar gained on the Euro throughout Friday’s session as Eurozone data unexpectedly stole the proverbial spotlight. The Eurozone’s current account registered a narrowing of the surplus, falling from 32.0B to 20.5B, and the Euro fell against most of its counterparts.
US existing home sales data will be today’s highlight and this will therefore provide the Euro the opportunity to gain on the greenback if home sales fall as predicted.
GBP/AUD: Currently trading at 1.9199
This pair rose a cent after strong UK CBI realised sales figures were released. Meeting resistance at the 1.922 mark, this pair continued to trade within a tight range around the 1.918 level.
Level trading is likely to continue through today’s session with the only data-of-note being US home sales data this afternoon. Whilst this is forecast to decrease, it is unlikely to affect the Aussie too much in either direction.
GBP/NZD: Currently trading at 2.0168
Sterling has been gaining on the Kiwi since early Friday morning after poor NZ data was released. Poor ANZ business confidence data on Friday, coupled with strong UK CBI realised sales, saw the pound gain a cent on the Kiwi.
Today’s trading will be in anticipation of New Zealand’s trade balance figures, which will be released at 21:45 tonight. Forecast to increase from -908M to -550M, the Kiwi should be able to resist the pound’s recent strength and begin to post gains of its own.
GBP/CAD: Currently trading at 1.8120
After ten days of Sterling gains, the Loonie has been able to resist the pound and maintain a stable trading position for the past four days. Canadian data on Friday saw core CPI falling from 0.3% to -0.2% and Core retail sales rising to the forecast level of 0.2%. This data continued the previous trend of level trading and the Loonie failed to post its own gains against the pound.
Stability can be expected to extend into today’s session as no data is due out of either country. CAD traders may turn to US existing home sales data this afternoon however this is unlikely to provide the Loonie with any strength.
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