Dollar gains amid continued Greek uncertainty

Enrique Díaz-Álvarez24/Jun/2015Currency Updates


Sterling touched yet another seven year high against its trade weighted basket of currencies yesterday, despite finishing 0.5% lower against the Dollar.

There was just the one data release in the UK yesterday. The Confederation of British Industry’s industrial trends survey, a measure of trends in overall activity, plunged to its lowest reading since July 2013. The index fell from a reading of -5 to -7, with CBI claiming that improved momentum in the Eurozone economy was offset by the negative effect of a strengthening Pound on the sales margins of UK manufacturers. These factors, coupled with uncertainty caused by the ongoing negotiations in Greece, has had a significant downward effect on manufacturing orders from overseas. Despite the overall gloomy tone of the report, the index still remains above the long term average of -15.

Economic data out of Britain today remains minimal. This morning the British Bankers’ Association will be releasing mortgage approval numbers for May at 9.30am.


The Euro ended trading lower against both its major peers for the second consecutive day, down by 0.8% versus Greenback and by 0.3% against the Pound.

Greece’ bailout hopes entered a crucial 48 hour period yesterday. While optimism remained, the Greek government came under fire amid warnings that their new reform proposals could hurt growth and lead to job cuts. Today will mark the start of another crucial Eurogroup meeting, with a deal between Greece and its creditor’s top of the agenda. If a deal is signed off at the meeting today, we could see EU leaders give approval to unlocking billions in aid loans at some point tomorrow.

The main data from yesterday came from Markit with the announcement of the flash PMI’s for June. Despite causing a lack of movement in the Euro, these were all mostly impressive. Manufacturing growth for the wider Eurozone expanded more than forecast, fuelled by growth across the board, from an index of 52.2 to 52.5. Service sector growth also excelled, climbing to 54.4 following sharp increases in activity in Germany and France. Overall business growth is now at its highest in four years, indicating the economy is on course to expand by around 2% this year.

This morning the IFO will be announcing its monthly measures of business confidence in Germany.


The US Dollar rose by 0.7% against its major peers yesterday, driven by rising US treasury yields and some impressive housing data.

There was a string of data out of the US yesterday, with most traders focusing on that of durable goods orders, which disappointed most expectations. New orders for durable goods decreased month on month, to a seasonally adjusted 1.8% in May, according to the Commerce Department, meaning overall orders for the first five months of the year are down by an annualised 2.2%. The drop off last month was in part reflected by a fall in demand for aircraft, with the measure excluding transport up by 0.5%.

Elsewhere, growth of new home sales dipped marginally month on month to 2.2%, although managed to post the highest number since the financial crisis in February 2008. Sales over the month increased to an annual rate of 546,000, amid a buoyed housing market spurred on by strong job growth and low mortgage rates. Manufacturing growth also remained strong, despite dipping slightly in June. Markit’s flash PMI fell to 53.4, from 54.0 in June, its lowest level of growth since as far back as October 2013.

The Dollar may be given a further boost this afternoon with the announcement of revised growth figures for the first quarter. On an annualised basis, growth is expected to be revised upwards to around -0.2%.


Written by Enrique Díaz-Álvarez

Chief Risk Officer at Ebury. Committed to mitigating FX risk through tailored strategies, detailed market insight, and FXFC forecasting for Bloomberg.