| 6/19/2008
3:20 PM: EUR/$..1.5494 $/JPY..107.94 GBP/$..1.9725
$/CHF..1.0458 AUD/$..0.9509 $/CAD..1.0148
GBP Rallies, Oil Retreats
The greenback edged higher against the euro in
the Thursday session rising to 1.5468 on the heels
of a pullback in oil prices. Prompting the retreat
in oil were reports that China would raise retail
prices for gasoline by 17% -- sending contracts
for WTI crude to $132.50 per barrel. Nonetheless,
the major currency pairs have remained confined
within ranges as traders continue to gauge the
direction of global interest rate differentials.
With markets largely expecting the ECB to hike
rates by 25-basis points in July to 4.25%, the
focus will be on the timing of the FOMC’s
next move. Fed fund futures are currently pricing
in a 50% probability for a 25-basis point rate
hike by the August meeting. Meanwhile, the SNB
left its monetary policy unchanged when it announced
its decision overnight with Bank President Roth
saying “there is enough reason to suggest
the current inflationary trend is of a transitory
nature”.
US economic reports released in the Thursday
session included weekly jobless claims, the June
Philadelphia Fed survey and May leading indicators.
The weekly jobless claims number fell to 381k
versus 384k from the previous week while the May
leading economic indicators held steady from a
month prior at 0.1%. However, the Philadelphia
Fed survey reflected continued weakness in manufacturing
with the report deteriorating to minus 17.1 and
missing estimates for an improvement to minus
12.0 from minus 15.6.
Sterling Edges Higher
The sterling firmed against the euro and dollar
benefitting from higher than expected retail sales
data. The May retail sales figures posted steep
gains and sharply exceeded forecasts, up 3.5%
compared with a 0.2% decline a month earlier and
surging to 8.1% versus 4.2% in the previous year.
The report revealed retail sales at its strongest
levels since 1986 – sending the pound to
0.7846 versus the euro and 1.9742 against the
dollar.
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