Business | Markets
Broker's notes: Sterling declines against the euro and US dollar; gold firms up in Europe
UK sterling fell against the euro and the dollar on Thursday
- Staff Report
- Published: 19:22 September 2, 2010
Sterling
UK sterling fell against the euro and the dollar on Thursday as weaker-than-forecast housing and construction data added to fears that a fragile UK economic recovery could be running out of steam. A survey of purchasing managers showed on Thursday that growth in Britain's construction sector slowed markedly in August, led by a loss of momentum in residential construction. Building society Nationwide said seasonally adjusted house prices dropped 0.9 percent in August after a 0.5 percent fall in July, much worse than the 0.2 percent decline economists had forecast and the sharpest drop since February. The key support for the sterling is at $1.5322, the 38.2 percent retracement of the May to August rally, just below Tuesday's 5-week low of $1.5327.
Euro
The euro firmed up on Thursday on healthy results at Spanish and French bond auctions but investors' appetite for risk was tempered ahead of a European Central Bank policy meeting later in the day and US jobs data Friday. Market players were wary of chasing prices aggressively ahead of the ECB meeting, where they expect the central bank to keep its benchmark refinancing rate at 1.0 percent and extend lending support for banks despite raising its economic growth forecasts. The euro hit a session high of $1.2837 earlier in the session. The next target for the euro was around $1.2873 a 38.2 percent Fibonacci retracement of its fall from its August peak of $1.3334 to its August low of $1.2588. The target after that would be $1.2923, touched on Aug. 18.
Gold
Gold firmed in Europe on Thursday as investors remained on the defensive ahead of a raft of US data, with a rise in holdings of the world's main gold exchange-traded fund pointing to strong appetite for the metal. Investors are now looking ahead to U.S. data releases on factory orders, home sales and employment later in the day for fresh clues on the outlook for the world's largest economy, and to a key U.S. non-farm payrolls report on Friday. Investment demand continues to be firm with the world's largest gold-backed exchange-traded fund, SPDR Gold Trust reporting that its holdings rose to 1,304.028 tonnes on September 1, from 1,302.508 tonnes on August 31.
Retail gold demand volumes in Dubai and Abu Dhabi dipped by around 15 percent in August on the year, as the holy month of Ramadan led consumers to focus more on food purchases. The holy month of Ramadan, where Muslims fast from sunrise to sunset started on 11 August and is expected to end on 10 September depending on the lunar calendar. Retail sales represent the bulk of gold demand in the Gulf region because the investment market is in its infancy. Traders are expecting sales to accelerate during the first two weeks following Ramadan and this pickup in demand will more than make up for the losses encountered over the past weeks. Overall, retail gold demand volume in the Middle East during the second quarter of the year was mixed, with Saudi recording a 5 percent rise on the year, while the UAE fell by 15 percent, according to a report by the World Gold Council (WGC).
Oil
OPEC crude oil supply fell in August to the lowest since November 2009 as reduced supplies from Nigeria, the United Arab Emirates and Iraq offset increased output in Angola. Supply from the 11 members of the Organization of the Petroleum Exporting Countries with output targets, all except Iraq, averaged 26.83 million barrels per day (bpd) last month, down from 26.95 million bpd in July, according to the survey of oil companies, OPEC officials and analysts. The decline mainly reflects output disruption in Nigeria and Iraq rather than an OPEC effort to improve adherence to output targets. Analysts say higher compliance is unlikely without a slide in oil prices.
Source: Richcomm Global, Dubai
|
Price Update |
|
|
GOLD |
1249.5 |
|
SILVER |
19.47 |
|
EURO |
1.2819 |
|
GBP |
1.5385 |
|
YEN |
84.1 |
|
RUPEE |
46.72 |
|
AED / INR |
12.72 |
|
AUD |
0.9087 |
|
CHF |
1.0098 |
|
CAD |
1.0497 |
|
OIL – (WTI-Aug'10) |
73.15 |
|
|
|
|
Date |
September 2, 2010 |
|
Time |
4:13:25 PM |
More from Markets
More from Business
Business Editor's choice
-
Two Europe banks to inject new cash
Bank of England to pump £50b into UK as ecb mulls second credit offer
-
Nokia cuts 4,000 jobs in 3 countries
Company is struggling to make inroads in the smartphone market
