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IMS FX DAILY MORNING REPORT - Wednesday 12th January 2011

Today's Interbank rates -

POUNDS TO US DOLLARS 1.5656
POUNDS TO EUROS 1.2006
POUNDS TO AUSTRALIAN DOLLARS 1.5784

EUROS TO US DOLLARS 1.3038
EUROS TO POUNDS 0.8328
EUROS TO AUSTRALIAN DOLLARS 1.3145

POUND HEADLINES:

• Sterling is looking well supported by a combination of rising UK rate expectations, some paring back of long USD positions, and persistent negative EUR sentiment. UK rate expectations may well continue for a little while, especially if next weeks CPI is strong, and for the moment this is seen as GBP positive, though in reality real UK rates remain the lowest of the major currencies, suggesting limited scope for GBP gains on this basis in the longer run.
• In terms of economic data, the UK trade figures are released today. Consistent with strong readings from the PMI and CBI surveys, we look for a narrowing in the visible trade balance to -£8.2 bn in November from -£8.5 bn in October. It is expected this trend will gather momentum over the coming year, as exporters benefit from sterling weakness and domestic demand remains soft.
• A new study has revealed that the jobs market is 'on the road to recovery', with a very strong rise in demand for staff. The survey of recruitment consultants and employers in December found permanent staff vacancies rising at their fastest level in four months. KPMG warns the future recovery is uncertain, as the governments austerity measures take effect.

EURO HEADLINES:

• Today's Portuguese auction has been so well flagged it would be a major surprise if it were not gobbled up very easily. This is no doubt expected by the majority, but there may still be scope for a EUR bounce on the news. Tomorrow's Spanish auction will then be the instant focus, but this is likely to be similarly easily funded.
• Portugal is set to issue bonds due in 2014 and 2020 in a bid to raise between 750 million euros and 1.25 billion euros respectively.
• Portugal is likely to remain under pressure to accept financial assistance from the EU and IMF. In particular, investors remain nervous over the country's ability to meet its 2011 fiscal target.

US DOLLAR HEADLINES:

• USD gains were limited to the JPY and CHF yesterday as risk appetite recovered after the dip in equities on Monday. There should be scope for a further risk recovery today if, as seems likely, the Portuguese auction attracts plenty of demand, but upside for the USD now looks more limited on such news as USD/JPY rallies tend to need rising US yields to drive them.
• Sterling/Dollar has been very steady this week although the pound is slowly climbing for its fourth consecutive day currently trading above 1.5650
• There are a number of US releases this afternoon although nothing major. Primary focus will be on the eurozone as debt auctions get underway.

If you need to buy, sell or make an international payment today then please call me for a free quote.

Kris Charalambides

FX Broker

kris@imsfx.co.uk

www.imsfx.co.uk

Tel: 0207 183 2790

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IMS FX DAILY MORNING REPORT - 11th January 2011

Today's Interbank rates -

POUNDS TO US DOLLARS 1.5526
POUNDS TO EUROS 1.2017
POUNDS TO AUSTRALIAN DOLLARS 1.5797

EUROS TO US DOLLARS 1.2919
EUROS TO POUNDS 0.8321
EUROS TO AUSTRALIAN DOLLARS 1.3144

POUND HEADLINES:

• It is another light day for economic data, with only a few second tier surveys due for release. Following the overnight publication of the UK BRC retail sales monitor, and the latest quarterly report from the BCC, early attention in the sterling markets will be on digesting prospects for consumer spending and the wider economy in light of these reports.
• As David Cameron noted over the weekend, the Bank of England faces a difficult judgement as it weighs up rising short-term inflation against leading indicators of growth, which remain mixed at best.
• Last weeks drop in the services PMI below the key 50 level, and yesterday's 1.3% drop in the Halifax house price index - the largest fall in three months - provide an early hint that the economy may be starting to cool.
• Pound/Euro interbank rate currently trading just above 1.20s. Key levels today are the 1.2050 benchmark. If the pound can break above this we feel we could see pound/euro hitting 1.2200. GBPEUR 1.2070 resistance level will be key as this will be the sell off point if breaks through benchmark rate.

EURO HEADLINES:

• The euro rebounded off a four month low but still remained under pressure. It was mentioned by Reuters that an unnamed but senior Eurozone official suggested that Germany and France among others have been pressuring Portugal to seek financial assistance from the EU and IMF before the governments funding situation grows worse.
• The single currency is under pressure in the days ahead as Spain, Portugal and Italy are scheduled to tap the debt market this week.
• The interest rate Portugal must pay to borrow funds hit a fresh high on Monday, as speculation mounted it would join Greece and the Irish Republic in needing an international bail-out. The yield on 10-year Portuguese government bonds rose for the fourth consecutive day, hitting 7.16%. The country's borrowing costs have surged as investors worried over its financial health.

US DOLLAR HEADLINES:

• Fairly listless trading conditions yesterday were repeated in Asia overnight, with absence of data or events keeping the dollar index within touching distance of 81.444, the November 30th high.
• The dollar had a mixed trading session as it hit a four month high against the euro before retreating slightly.
• There was a lack of any notable economic data for Monday: but there was interesting Fed commentary. The Feds Lockhart noted that seemed to echo Bernanke and support his belief in maintaining the stimulus program. In addition to which was Janet Yellen's suggestion that it may take 7 years to get the Fed balance sheet back to normal.

If you need to buy, sell or make an international payment today then please call me for a free quote.

Kris Charalambides

FX Broker

kris@imsfx.co.uk

www.imsfx.co.uk

Tel: 0207 183 2790

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IMS FX DAILY MORNING REPORT - 10th January 2011

Today's Interbank rates -

POUNDS TO US DOLLARS 1.5486
POUNDS TO EUROS 1.1996
POUNDS TO AUSTRALIAN DOLLARS 1.5642

EUROS TO US DOLLARS 1.2909
EUROS TO POUNDS 0.8335
EUROS TO AUSTRALIAN DOLLARS 1.3039

POUND HEADLINES:

• EUR/GBP broke lower on Friday, and the next target is the August low at 0.8140. This is mostly a EUR story, but Cameron's indication of concern about high inflation will be grist to the mill of the UK rate hawks, and may also provide some sterling support.
• In the spotlight this week are UK rate expectations. Several banks have increased their rate expectations in the past week, mainly because of the persistent inflation overshoot in the UK. Sterling appears to have benefited (though most of the trade-weighted gain has been due to EUR weakness rather than sterling strength). But we retain the view that UK inflation has been caused by a variety of factors that are likely to prove temporary, and the UK domestic demand strength is not one of them. Even if UK rates do rise in these circumstances, although this is unlikely given the trend in UK services PMI, rate hikes that are based on higher inflation rather than stronger growth should not be positive for the currency.
• UK house prices have continued to slip, falling by 1.3% in December from the previous month, figures from the Halifax have shown. The decline was less than falls seen in the second half of 2008.

EURO HEADLINES:

• The EU periphery debt saga continues, with Portugal now reported to be under pressure to accept a bailout, though this is been denied. This weeks Portuguese and Spanish auctions are near certain to attract decent demand, but will not change market sentiment on the Euro which continues to require some more permanent credible arrangements for dealing with debt problems if it is to stabilise.
• Eurozone Sentix Investor confidence for January comes in at 10.6 missing expectations of 11.8.
• French manufacturing for November month-on-month comes in at 2.2% beating expectations of 0.8%. The year-on-year figure is 5.1% beating expectations of 3.6%. French Industrial production for November
  month-on-month comes in at 2.3% beating expectations of 1.0%

US DOLLAR HEADLINES:

• The employment report on Friday turned out to be as expected, with the revisions and the decline in unemployment compensating for a disappointing headline number. The underlying picture is still that US growth is at trend and consequently unemployment is unlikely to fall significantly any time soon.
• The US economy is showing signs of a "self-sustaining recovery", but is not growing fast enough to reduce high jobless levels, Fed Reserve Chairman Ben Bernanke has said. Mr Bernanke also said that it could take four to five years for the job market to normalise. As well as unemployment low inflation is also a concern.
• China's trade surplus shrank to an eight month low in December it has been confirmed. Imports increased by 25.6% on the same month a year earlier, leaving China with a surplus of $13.1bn ($8.4bn). Analysts said the data may give Beijing grounds to fend off US pressure for faster currency appreciation ahead of Chinese President Hu Jintao's visit to the United States next week. Many US politicians and economists accuse China of manipulating the value of the Yuan in order to boost its net exports at the expense of its trading partners.

If you need to buy, sell or make an international payment today then please call me for a free quote.

Kris Charalambides

FX Broker

kris@imsfx.co.uk

www.imsfx.co.uk

Tel: 0207 183 2790

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IMS FX DAILY MORNING REPORT - 7th January 2011

Today's Interbank rates -

POUNDS TO US DOLLARS 1.5459
POUNDS TO EUROS 1.1902
POUNDS TO AUSTRALIAN DOLLARS 1.5577
EUROS TO US DOLLARS 1.2988
EUROS TO POUNDS 0.8401
EUROS TO AUSTRALIAN DOLLARS 1.3088

POUND HEADLINES:

• UK services PMI was much weaker than expected yesterday,
  and although some of this looks to have been weather related, it also looks
  partially a genuine reflection of deteriorating service sector prospects.
• Sterling was largely unaffected as the market focused on
  Euro weakness, but the UK numbers do stand out as weak against a general set
  of strong numbers elsewhere in the last few weeks. Sterling is vulnerable,
  but for the moment EUR/GBP is targeting a test of the 0.8330 December low,
  and downside risks for sterling seem greater in cable.
• Demand for home loans is expected to fall in the coming
  months as the mortgage market continues to stagnate. Lenders believe that
  demand for mortgages for house purchases will drop in the first three months
  of 2011 as people delay decisions to move. These views are reported in the
  Bank of England's Credit Conditions Survey.

EURO HEADLINES:

• This morning it is expected that eurozone Q3 GDP growth
  will remain unchanged at 0.4% in the final estimate. The eurozone
  unemployment rate is also predicted to remain steady at 10.1% in November -
  a 12 year high.
• Data yesterday showed German manufacturing orders surged
  5.2% in November, putting an upside risk to our industrial production
  forecast.
• Euro periphery debt weakened further yesterday helped by
  an announcement of a Portuguese bond auction next week. It does seem likely
  that the Portuguese and Spanish bond auctions will be easily funded next
  week, but while there is potential for a Friday rally simply because
  the speculative market must now be quite short Euro, it is hard to see how
  the downtrend is turned without some more news on bailout arrangements
  across the Eurozone.

US DOLLAR HEADLINES:

• The US recovery has gained some traction according to
  recent data, with this weeks ISM surveys both showing a pick up in activity
  in December, underpinned by resurgent production and a sharp rise in new
  orders.
• Ahead of today's December Employment Report, most
  attention this week was taken by an astonishingly strong ADP report, showing
  a record (since 2001) 297,000 private sector jobs added in December.
• USD strength extended across the board yesterday as the
  combination of expectations of a strong employment report and more widening
  spreads in the EU periphery intensified the pressure on EUR/USD.

If you need to buy, sell or make an international payment today then please
call me for a free quote.

Kris Charalambides

FX Broker

kris@imsfx.co.uk

www.imsfx.co.uk

Tel: 0207 183 2790

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IMS FX DAILY MORNING REPORT - 6th January 2011

Today's Interbank rates -

POUNDS TO US DOLLARS 1.5480
POUNDS TO EUROS 1.1804
POUNDS TO AUSTRALIAN DOLLARS 1.5526

EUROS TO US DOLLARS 1.3114
EUROS TO POUNDS 0.8471
EUROS TO AUSTRALIAN DOLLARS 1.3149

POUND HEADLINES:

• Today's focus will be on the UK services PMI for
  December. Markets will hope for a positive surprise similar to that seen in
  the manufacturing release earlier this week.
• UK services PMI is a dangerous number for sterling today.
  With data elsewhere on the positive side, a weak UK number could make
  sterling the funding currency of choice, given the hit still to come this
  year from fiscal austerity measures.
• Despite a disappointing reading of activity in the
  UK's construction sector, sterling gained a cent against a weaker euro
  yesterday and has touched a three-week high this morning.

EURO HEADLINES:

• Germany's factory orders for November are published today
  and are likely to show material signs of softening in the wake of more
  recent declines in key Asian PMI's.
• Also today it is expected the Eurozone business
  confidence indicator to rise in December based on stronger domestic surveys,
  while the final reading of consumer confidence is also due.
• While the Euro suffered initially on strong US data, the
  Euro tends to benefit in more benign risk conditions, and already is at
  quite extended levels against the commodity currencies which would normally
  benefit from risk positive news. While sovereign debt concerns remain,
  evidence of strong growth globally will tend to moderate these concerns too,
  and may limit negative sentiment towards the Euro.

US DOLLAR HEADLINES:

• In the US, this weeks jobless claims will continue to
  drip-feed labour market news in the wake of yesterdays strong ADP payrolls
  survey.
• Claims fell to their lowest level in 2.5 years last week.
  This will be the final teaser before tomorrows payrolls release.
• The USD benefited from the rise in ADP employment, but
  sustained USD gains will require some genuine belief that US rates are set
  to rise this year, and that will require several months of payroll gains of
  more than 300k.

If you need to buy, sell or make an international payment today then please
call me for a free quote.

Kris Charalambides

FX Broker

kris@imsfx.co.uk

www.imsfx.co.uk

Tel: 0207 183 2790

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IMS FX DAILY MORNING REPORT - 5th January 2011

Today's Interbank rates -

POUNDS TO US DOLLARS 1.5573
POUNDS TO EUROS 1.1737
POUNDS TO AUSTRALIAN DOLLARS 1.5541

EUROS TO US DOLLARS 1.3268
EUROS TO POUNDS 0.8519
EUROS TO AUSTRALIAN DOLLARS 1.3240

POUND HEADLINES:

• UK equity markets roared back into life after the New Year break with the FTSE-100 closing up over 100 points the first trading session of the year. Part of the optimism may have been related to a firm of economic data out during the day with the UK manufacturing PMI survey hitting a 16-year high and mortgage approvals rising slightly against expectations of a small decline.
• Today Construction PMI is expected to indicate that activity in the sector continues to moderate with an outside risk of the index potentially dropping into contraction territory. It is expected that over the medium term, with residential, commercial and public sector projects continuing to face headwinds, the construction sector could lag the rest of the economy in 2011.
• Tomorrows data sees GBP Purchasing Manager Index Services for December

EURO HEADLINES:

• In the eurozone, the markets will focus on the latest set of services PMI readings which are expected to remain unchanged on the previous month both in Germany and the region as a whole. However, with the
  manufacturing index showing an unexpected improvement earlier in the week, there will be optimism that the recovery is gaining some much needed momentum.
• Tomorrows eurozone data sees the publications of consumer confidence, retail sales and German Factory orders.
• Eurozone PMI services for December comes in this morning at 54.2 beating expectations of 53.7

US DOLLAR HEADLINES:

• In the US, after the publication of the latest Fed minutes attention turns to the ISM non-manufacturing index, ahead of Fridays non-farm payrolls, the latest ADP employment numbers.
• US data have generally been strong over the past month and markets are looking for the latest releases to confirm that this momentum has been sustained.
• The Federal Reserve will continue with its $600bn stimulus programme as it is not convinced by recent signs of a strengthening recovery in the US economy. The Fed did acknowledge the improving outlook, but said the programme - dubbed QE2 - would continue.

If you need to buy, sell or make an international payment today then please
call me for a free quote.

Kris Charalambides

FX Broker

kris@imsfx.co.uk

www.imsfx.co.uk

Tel: 0207 183 2790

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IMS FX MORNING REPORT for Tuesday 4th January 2011

Today's Interbank rates -

POUNDS TO US DOLLARS 1.5615
POUNDS TO EUROS 1.1653
POUNDS TO AUSTRALIAN DOLLARS 1.5467

EUROS TO US DOLLARS 1.3399
EUROS TO POUNDS 0.8581
EUROS TO AUSTRALIAN DOLLARS 1.3273

POUND HEADLINES:

• Sterling has been the worlds weakest currency in the last few weeks, and today's PMI offers an opportunity to recover. Although a rise is unlikely after the stronger number last month, and as expected above 57 would emphasise that UK manufacturing remains on track, though it is the service that is more of a concern.
• The top rate of VAT has risen from 17.5% to 20% as the government looks to boost tax revenues to cut the UK's debt levels. The government says the rise is necessary to help bring down the UK's high budget deficit. The VAT rise is also a worry for the bank of England. At 3.3%, the annual rise in the consumer prices index is already well above the Banks target of 2%, and the increased VAT rate is likely to push inflation towards 4% this year, analysts say.
• UK mortgage approvals for November has come in at 48.0k beating expectations of 46.5k

EURO HEADLINES:

• The Euro has managed to hold its ground against the USD in spite of weakness against the more solid currencies like the CHF, NOK and SEK in the last few weeks, and the message of support from China overnight may provide some cross support today.
• The eurozones manufacturing sector ended 2010 enjoying strong growth. The strongest growth was recorded in Germany, but Greece's manufacturing sector continued to shrink. Germany remained the star performer, seeing near record growth.
• Eurozone CPI estimate for December year-on-year comes in at 2.2% higher than the forecast of 2.0%

US DOLLAR HEADLINES:

• Another strong US ISM helped support the USD yesterday, and a weaker Australian PMI overnight also helped reduce appetite for carry positions. Tonight's FOMC minutes will be a focus, but it is unlikely the Fed has changed its tune much in a holiday shortened month.
• Sterlings broad bounce is helping it against the US dollar today with the price heading back over $1.55 having slid over a cent yesterday

If you need to buy, sell or make an international payment today then please
call me for a free quote.

Kris Charalambides

FX Broker

kris@imsfx.co.uk

www.imsfx.co.uk

Tel: 0207 183 2790