Daily Insight

TorFX is a leading foreign exchange broker, offering ultra competitive exchange rates for currency transfers, and an in-depth analysis of the foreign exchange markets. Our customers benefit from an unrivalled personal service and substantial savings.

06 November 2006

The Dollar advanced under 1.9000 against the Pound as U.S unemployment unexpectedly shrank to 4.4% in October

Without doubt, the focus this week will fall on the Bank of England interest rate announcement on Thursday where the monetary policy committee are widely expected to lift UK interest rates by a further quarter-point to 5.0% as inflation still remains above the government's 2.0% target despite a sustained drop in energy prices and the unfolding U.S economic slowdown on the global economy. However, with inflation running at 2.4% and the continued growth in the housing market, policy makers will be careful not to repeat past mistakes and ensure price stability is maintained while we wait for the 15th November and the release of the minutes of the meeting for an indication as to whether the BoE will need to continue raising rates into 2007. In terms of economic data, the Pound may receive a boost this morning as UK industrial production is widely expected to increase by 0.3% month-on-month in September while manufacturing output may rise to an annual rate of 2.4%.

The Euro has been struggling against the Pound over the past month and that trend continued last week despite a very good indication from the chairman of the ECB, Jean-Claude Trichet, that Euro-zone interest rates will be lifted for the fifth time this year in December. Although policy makers kept their benchmark lending rate on hold at 3.25% in November, the accompanying press conference adopted a much more hawkish rhetoric with regards future policy as Trchet used the trigger words "strong vigilance" to signal a further rate hike the following month. There is a sparse supply of economic data released this week in the Euro-zone and the Euro may receive a much needed boost this morning with the release of German manufacturing orders for the month of September, with factory orders expected to soar to 11.5% from August. Elsewhere, growth in European service industries probably accelerated in October, driven by higher oil prices, which in turn leads to increased spending as the index rose to a reading of 57 from 56.7 in September.

Following on from last week, the Dollar ended the week on a positive note as the monthly U.S job report came in better-than-expected in October as the economy added 92,000 jobs while September nonfarm payrolls was revised up to 140,000. In addition, average hourly earnings increased by 0.4% from September as U.S unemployment unexpectedly shrank to 4.4% from 4.6%. As a result, the Dollar made significant gains against the Pound as we dropped below 1.9000 in the aftermath of the figure. However, the Dollar may continue to remain vulnerable amid a sparse supply of economic data released this week with the focus falling on the U.S trade report on Thursday, which is expected to show that the deficit in goods and services actually narrowed in September led by lower oil imports.

Data Released 6th November

UK 09:30 Industrial Production (September)
- Manufacturing Output

EU 09:30 PMI Services (October)
EU 10:00 Producer Price Index (September)

GER 11:00 Manufacturing Orders (September)

written by Adam Solomon

Open an Account
Currency Transfers
International Money Transfers
Currency Rate
Request A Quote
Foreign Currency Rates
Currency Rate
Request A Quote
Foreign Currency Rates
foreign currency exchange rates
Foreign Exchange Broker
Best Exchange Rate
Tor Currency Exchange Ltd, Penlowarth, Penzance, Cornwall, TR18 4ED
Registered Company Name: Tor Currency Exchange Limited. Registered in England & Wales, Number: 5193147.
HM Revenue & Customs Certificate of Registration for Money Laundering Regulation, Number: 12191606.
Copyright © 2004 - 2008 Tor Currency Exchange Ltd