| Blue FX Markets Weekly Update |
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Monday 12/07/10: 1640: EURUSD – 1.2571: EURGBP – 0.8370 (Last week: EURUSD – 1.2550: EURGBP – 0.8260) The Euro gained more confidence last week after Jean Claude Trichet talked up Eurozone growth prospects and Germany continues to fire ahead. It doesn’t get better than this for the Euro. EURO/ DOLLAR Trichet on Thursday displayed an upbeat demeanour when duscussing the European economy. He brushed off fears of a double dip recession which exuded confidence. This was what the markets wanted to hear and the Euro subsequently rose above 1.27 to the Dollar. German exports also lifted sentiment, demonstrating large gains in May. Reports suggested that Germany was beneffiting from a sweetspot of low interest rates, a weak Euro and booming emerging markets demanding their high end engineering and automobile products. This positive news flow from Europe’s largest economy followed lacklustre news from the US, which shed jobs in May (as announced the previous Friday afternoon). Outlook: It doesn’t get much better from here for the Euro. The uneven outlook for the Eurozone economically is likely to take centre stage again soon at which point the curerncy is likely to weaken. Upcoming 2nd quarter results from the US are also likely to dissapoint, which should prove catalyst to a risk off (dollar strong) environment). Pound Some new this afternoon worth noting is that the UK has been put on negative watch by S&P, the ratings firm. This has weakened the Pound after recovering somewhat from falls last week. Falls last week were driven by positive sentiment towards the Euro and data from the UK pointing to evidence of a peak emerging in the UK recovery story. Outlook: The Euro has enjoyed some positive press over the past few days but bank stress tests and sovereign debt woes are never far from the surface. Next Week Tues – UK Consumer Price Index, German ZEW Economic sentiment Wed – UK unemployment, EU Consumer Price Index, European Industrial Production, US FOMC Minutes Thurs – US Producer Prices Index Fri – US Consumer Prices Index Source: Blue FX Markets |