Forex market report 01/04/09

Dollar makes gains on safe haven status
Sterling pushes upwards against the euro
Single currency under pressure against majors—ECB expected to cut rate
Commodity currencies post large gains
G20 meeting in London

US Dollar: The dollar gained against its major rivals yesterday, with the greenback staking its claim as the second safe haven currency after the yen. This was still on the back of the US auto car makers story and concerns whether Washington will let GM and Chrysler go bankrupt. It looks like a mirror image of Monday—risk aversion grew on uncertainty surrounding the fate of the big three auto makers in the US. EUR/SUD held onto its gains from Mon¬day, as the euro remains under pressure from continued weak economic data and a potential interest rate cut tomorrow. This combined with the dollar being the currency of choice for risk averse investors, looks like it may keep the dollar up on the single currency. The dollar did start to give up some gains made on the pound, but we saw a narrow trading range between $1.42 and $1.4330.  Data 15.00: ISM manufacturing, Pending Home Sales and Construction Spending.

Pound: Sterling took full advantage of an under fire euro yesterday, with the pound managing to break back over the 1.08 level. There has now been a gain of nearly two cents on the euro from 1.07 to 1.0871, just reached in this mornings trade. The pound is benefitting from a potential interest rate cut due tomorrow from the ECB. Against the dollar its has been mixed, with an initial decline against the greenback as the safe haven play was back in play for the dollar. Investors ran for the safety net which the dollar seems to offer at present. This morning has seen a move upwards for cable, with GBP/USD breaking back over the $.43 level. The biggest loss for the pound was against the commodity currencies, as investors bought back into more riskier trades, buying higher yielding currencies where returns are higher than in their home countries. The G20 starts in London to¬day, continuing into Thursday, so currency markets will remain volatile, with remarks by world leaders expected to have an impact on the majors. Data 09.30: PMI Manufacturing expected 35 from 34.7, BoE Housing Equity Withdrawal expected –5.7B unchanged. Two-day Meeting starts today for the G20 in London.

Euro: The euro is lower today against its major rivals, with EUR/USD seeing the biggest decline. We did see some initial gains for the single currency in the morning session yesterday as book squaring took place ahead of the fiscal year end. Equity markets did manage to rebound and appetite for risk revived, despite more gloomy eco¬nomic developments. Dealers describe yesterdays afternoon decline in the euro against the dollar, yen and pound as a momentary safe-haven play given the US auto sector woes. We will probably see further euro-selling if the European Central Bank gives out any clear signals (during its planned policy meeting Thursday) that it will adopt quantitative easing, just like the UK & US. The ECB is widely expected to cut its interest rate by half a percentage point to a record low of 1%. Data at 09.00: E/Zone Unemployment Rate expected 8.3% from 8.2%

We saw commodity currencies rally yesterday as market participants took the opportunity to enter into riskier trades. A higher return on investment saw gains for the Australian dollar & New Zealand dollar. We also saw gains for the Norwegian Kroner and Canadian dollar, as both currencies do benefit when commodity prices rise.


GBP/USD                        1.4344
GBP/EUR                        1.0876
EUR/USD                        1.3178
GBP/JPY                         141.29
GBP/AUD                        2.0806
GBP/NZD                         2.5734
GBP/ZAR                         13.697
GBP/CHF                         1.6416
GBP/CAD                        1.8152
GBP/SGD                        2.1844
GBP/THB                         50.75
GBP/HKD                        11.123

These rates are for indication purposes only.

This information has been supplied by Voltrex. For further information contact:

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