US airstrikes in Syria cause fluctuations in the markets

Claire Hogarth24/Sep/2014Currency Updates

GBP

Yesterday was a volatile day for Sterling against both the greenback and the single currency, falling sharply early on before regaining ground as the morning and afternoon progressed. The Pound initially fell violently by 0.6% against the Dollar before recovering ground as the UK market drew to a close, finishing the day 0.1% down. This, however, is predominantly down to goings on in the States and the Eurozone as the UK is set for a quiet few days relative to the flurry of announcements and activity of recent weeks.

A British Bankers Association report did, however, show that the number of mortgages approved within the UK had decreased by 1,127 (around 2.7%) in August, against the increase Economists were predicting.

All eyes tomorrow will be fixed on Wales as traders hope to gain an indication from Mark Carney on the nature and timing of an interest rate increase when he speaks at a GIRO conference at the Celtic Manor Hotel in Newport.

EUR

Manufacturing and services growth within the Eurozone slowed unexpectedly yesterday after the Purchasing Managers Index for the two industries declined between August and September from 52.5 to 52.3, according to London based firm Markit Economics. This is further bad news for the ECB who are under increasing pressures to add stimulus to the already waning economy. As a result, the Stoxx Europe 600 Index, an index tracking publicly traded companies across 18 European countries, fell by 1.1% yesterday. The Euro immediately fell against Sterling by 0.4% after the announcement, having earlier increased to a five day high as the markets opened.

Further bad data is expected with an IFO Institute for Economic Research report due for release today at 9:00am in Germany which is predicted to show that business sentiment has decreased to its lowest level in 16 months.

USD

The greenback fell against the Yen, bucking the recent trend as USD/JPY reached its lowest level in seven days, falling by 0.4% as news emerged that the US had begun air strikes in Syria against the Islamic State (IS) militant group. A total of 14 airstrikes destroyed IS training compounds, control facilities and vehicles, killing at least 70 militants and 50 other al-Qaeda-linked fighters according to activists.

Cable followed suit and rose by 0.6% as UK markets opened, however, as the day progressed the Dollar was able to stabilise with the US Dollar Index returning to its original level having initially fallen by around 0.4%.

At 3:00pm today the US Census Bureau will be releasing its New Home sales figures for August, hoping to improve on the bearish data for June and July which showed negative readings.

Rest of the world

India’s Rupee weakened for the first time in six days, falling by 0.3% versus the Dollar. This news came amidst concern that capital flows into emerging markets will slow as conflicts within the Middle East intensify between the US and the Islamic State (IS). This decline was the biggest amongst the 24 emerging market currencies tracked by Bloomberg.

Russia’s Ruble gained by 0.3% against the Dollar as the currency headed towards its strongest advance in three weeks as the country announced its first local debt sale in 10 weeks after fighting in Ukraine subsided. Russia has plans to sell over 230 billion Rubles in bonds throughout the remainder of 2014.

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Written by Claire Hogarth

Marketing Executive at Ebury. English Literature graduate from the University of York and a motivated professional.