Busy day on markets as China has effect

Yesterday was a particularly busy day on the market following the recent monster gains made by the Euro. In the mornings trading interestingly the Euro lost ground against both GBP and USD despite German IFO business climate data coming in better than expected. This is likely explained by the fact that the Euro was oversold in the last few days given the near 7 cent drop seen, but also the USD claws back ground and as a result see-saw effect seen in USD/EUR and respective GBP rates. This was further exacerbated in the afternoons trading as the US posted strong business climate data of its own. Throughout the day’s trading the greenback gained a cent against sterling, whilst the Euro lost a cent and a half. USD also gained also a cent and a half against Euro throughout the day.

As the dust settles (at least in the short-term) over the Greek situation, the big news of yesterday was that the Chinese have cut their interest rates by 0.25% points to 4.6% in a effort to calm stock markets. Whilst the stock markets may not have as much impact on the currency markets necessarily as Ecostats, this news has sent ripples throughout the global economy. As a result of this the UK and US may now delay any interest rate hikes and as a result this could spell bad news particularly for GBP which has in recent times been riding high over these expected rises.

So brace yourself for a busy period as the fallout from China and its cuts are yet to be seen. Will the UK and the US continue their pursuit of interest rate rises? Will Greece secure the IMFs backing for the remainder of the bailout?

Certainly the coming weeks and months will be a telling one for GBP, USD and EUR as the big three continue to battle it out.

Today is a slightly quieter way in the way of data. This morning we have UK mortgage approvals and mortgage applications, whilst in the afternoon the focus shifts across the pond to the US with the main news of the day, Durable goods orders.

With so much going on should you have any upcoming transfers to make stay in close contact with your C.I account manager who can help keep you well informed and provide.