Today has been an extremely volatile day in the FX markets, Halifax House price data has shown this morning that house prices have dropped the most since at least 1983. The figures were expected to show a 0.2% decline and came out at -3.2%. This could be the initial signal that we are heading back into a double dip recession.

The market this morning expected the BoE to hold interest rates yet undertake a £50 billion quantitative easing program. The market responded to the announcement with retracement accross the board on the news that the BoE were adopting a ‘wait and see’ approach. This recovery was short lived and the pound still looks fragile coming in to the end of the day.

The stock markets have started to slow down today, both European and US stock markets are fairly flat on the day. Initial Jobless claims unexpectedly decreased on further speculation that the Fed will buy debt to fuel the economic recovery.

Gold has hit a fresh high at 1,364.60 as AngloGold Ashanti, the world’s third biggest gold miner, said on Thursday it had wound up its hedge book months ahead of its original plan. This alongside the Vietnamese Government stating that they would consider lifting a ban on gold imports, has seen prices rocket.

The Euro has appreciated to 1.40 against the Dollar, the highest it has been since February, as Trichet today in the ECB press conference expressed little willingness to undertake any quantitative easing.

Tomorrow the focus shifts to US Non Farms. Historically this is one of the most influential releases in The FX market. The GBP/USD up trend could be set to continue now that the 1.60 level has been breached.

Support and Resistance

GBP/USD – Support 1.5670 / Resistance 1.6015
GBP/EUR – Support 1.1296 / Resistance 1.2015

UK Economic Releases

UK – PPI (0930)
US – Non-Farms Payrolls (1330)
US – Wholesale Inventories 1500

Luke Zorab
Torfx Currency Dealer
(01736) 335285