Price activity in the Forex market yesterday and overnight was rather volatile with Sterling falling to a seven week low of Stg 0.8402 versus the Euro following the release of UK Retails sales data for August. Figures released failed to meet analysts expectations with a figure of -0.5% against a projected +0.3% which saw a strong reaction in the FX markets as many buyers were caught offside with a net increase of “Short” positions following the release. The data released was a strong signal that UK consumers may be reining in on spending ahead of the tough spending cuts planned by the UK Government later in the year.

Despite the Pound trading down for a fourth consecutive day against the Euro, market support against the US Dollar is holding reasonably well due to the recent improvement in market sentiment and the typical cycle and correlation that follows appetite for risk. The commodity sensitive currencies have all seen a correction as equity markets open up positive this morning. Concerns about the UK economy, however, could limit moves to the upside against its major counterparts and thus buyers are advised to consider “Stop Loss” orders to protect against possible downside moves.

It is the Euro however that is the outperformer on the week as an increase in “Long” positions against both the USD and its major counterparts accelerated price movement throughout the week, with fresh highs seen at 1.31 against the USD. The USD/EUR trade dictates a significant amount of the liquid through the Forex market so lets not forget this tends to dictate a lot of price movement with the major currencies and so becomes significant when tracking its intra day price movement for signals of any changes in trend.

There is no UK data of note today, leaving the focus on the US numbers during this afternoons trade. Any buyers / sellers that wish to discuss an up and coming requirement can contact me on my direct line +0044 1736 335264. If you would like a live trading quotation you can also contact me on this number or email me direct at tom.trevorrow@torfx.com

Tom Trevorrow

Senior Trader

Tel: +0044 1736 335264

Email: tom.trevorrow@torfx.com