Foreign Exchange Report : GBP USD Drops Following Weak Japanese Trade Figures, While GBP NZD Rate Gains

June 20, 2011 - Written by John Cameron

STORY LINK Foreign Exchange Report : GBP USD Drops Following Weak Japanese Trade Figures, While GBP NZD Rate Gains

The Pound Euro exchange rate (GBP EUR) is 1.1332. The Pound Dollar exchange rate (GBP USD) is 1.6118. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5290.

The US Dollar has started this week’s session on the front foot, with the GBP USD rate dropping by almost half a percentage point during the Asian session.

The move in favour of the Greenback was caused by the overnight release of a weak Japanese Merchandise Trade Balance figure for May. The data showed that Japan’s trade gap widened to Y853.7bn last month, versus a gap of Y464.8bn in April. Analysts had expected Japan’s deficit to widen from April, but not by nearly as much as the figure showed.

This is the latest in a series of soft data releases in the world’s third largest economy, raising fears that March’s tsunami may yet stall the global recovery.

Further disappointing economic data was released in New Zealand overnight, as it was announced that Q1 Manufacturing Activity dipped to 2.9% from 3.0% in the last three months of 2010. This number caused the GBP NZD to trade up by almost a third of a percent just before the European open and saw further support for the US Dollar.

As the European session gets underway, market focus is likely to return to Greece’s debt crisis. Last week ended on a positive note for the Euro, with French President Nicolas Sarkozy and German Chancellor Angela Merkel jointly calling for a second bail-out to be arranged for Greece.

This call for action prompted Eurozone Finance Ministers to announce last night that they had committed to putting together a second Greek bail-out. This announcement is likely to further ease the immediate pressure on the Euro during today’s session. However the single currency is far from completely off the hook, as the Eurozone Finance Ministers also announced yesterday that they were delaying the payment of the last €12bn tranche of Greece‘s original €110bn bail-out until the Greek parliament passes stringent austerity measures.

Meanwhile, thousands of violent protestors gathered outside the Greek parliament yesterday, protesting against further cuts.


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