IMS FX Euro exchange Rate

IMS FX MORNING REPORT for Friday 5th November 2010

Today's Interbank rates -

POUNDS TO US DOLLARS 1.6195
POUNDS TO EUROS 1.1440
POUNDS TO AUSTRALIAN DOLLARS 1.5996

EUROS TO US DOLLARS 1.4156
EUROS TO POUNDS 0.8741
EUROS TO AUSTRALIAN DOLLARS 1.3983

POUND HEADLINES:

• The Bank of England held UK interest rates at a record low and decided not to pump more money into the economy via Quantitative easing. The decision to make no change comes after recent figures on the economy showed good growth.
• The move gave the pound an extra boost against both the dollar and the euro. The minutes to this weeks rate decision will be published on the 17th November.
• UK PPI core for October M/M comes in at 0.4% this morning beating expectations of 0.2%. The Y/Y figure is 3.3% missing an expected 4.4%. PPI input for the same month has also come back beating expectations at 2.1% against 0.9%. Year-on-Year figure is 8.0% beating expectations of 7.3%
• There is potential for Sterling to recover against the euro if the focus returns to the problems of the Eurozone periphery now the Fed QE decision is out of the way.

EURO HEADLINES:

• The European Central Bank kept interest rates in the eurozone on hold at a record low of 1% for the 18th month in a row.
• ECB president Jean-Claude Trichet returned to be drawn on the Feds action. He said he had 'no further comments on what is done by other central banks that have their own responsibility in their own environment'.
• Mr Trichet also said that the ECBs decision to maintain interest rates was 'appropriate', adding that recent data showed that 'the underlying momentum of the recovery remains positive 'despite prevailing uncertainties'.
• Yesterdays eurozone PPI for September came in as expected at 0.3%. The Y/Y figure also met forecasts coming in at 4.2%

US DOLLAR HEADLINES:

• The FTSE 100 hit a two year high as global stock markets reacted positively to the decision by the Federal reserve to pump $600bn into the US economy.
• With more dollar cash in circulation and with the US governments policy of buying bonds with the $600bn putting downward pressure on interest rates, as expected the dollar weakened against major currencies. The euro and pound both gained 2 cents following the announcements.
• Initial Jobless claims rose to 457k vs. 442k, continuing claims 4340k vs. 4378k.
• 3Q Non-farm productivity expands 1.9%, topping forecasts for a 1.0% rise. 3Q unit labor costs unexpectedly contract 0.1%
• With US mid term elections and the FOMC meeting now behind us, the focus turns to the US employment report due today.

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Kris Charalambides

FX Broker

kris@imsfx.co.uk

www.imsfx.co.uk

Tel: 0207 183 2790