Pound rises to $1.60 against USD
May 27, 2009
The pound has hit the $1.60 level for the first time in nearly seven months, the euro is also neatly poised just below 1.40 this morning as risk appetite improves as optimism through the equity markets improves. This has increased the demand for assets denominated in sterling which started the year suppressed as a flight to safety prevailed. Currently we are seeing optimism throughout global markets- recently driven by better than expected US consumer confidence numbers.
The dollar is also not currently fulfilling its usual status as a safe haven currency- concerns expressed on its sovereign debt rating looming over the dollar. Technically the market needs to maintain a breach over 1.60 to target 1.64 as the next key level. Keep one eye on the situation in North Korea as escalation or saber rattling will undoubtedly cause a rush back into the dollar.
Not a great deal of market data of note today with US existing home sales due out this afternoon being the main focus. North Korea as mentioned earlier could be a market mover and the fate of General Motors will be closely watched- GM faced a deadline to report on their levels of debt and concerns are increasing that bankruptcy is looming.
In other news Japans export downturn eased in April- falling 39.1% compared to the same month last year- this following a 45.6% fall in March. This resulted in a surprise trade surplus and raises hopes that the economy is past the worst and is on the road to recovery. This should help the Yen remain firm against the USD.
OPEC ministers are meeting in Vienna this week and are expected to make no change to volumes of oil supply as higher prices ease their concerns about both fuel inventories and the deepest fall in demand for years. The Saudis have been on the news-wires this morning talking oil higher, stating that the global economy is ready for a $75-80 per barrel price.
Report by Phil McHugh, Corporate Foreign Exchange
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