Broker's Notes: Sterling falls against the euro

Sterling

The sterling fell against the euro on Friday after German IFO's business sentiment index rose more than expected in September, easing some concerns about the euro zone's largest economy. German IFO's business climate index rose to 106.8, higher than forecasts for 106.2. The euro rose to a session high against the dollar and sterling on Friday while European shares pared losses and Bund futures turned negative after a German business climate survey came in above expectations.

Yen

Market seemed to be extremely cautious against yen selling intervention by Japanese authorities, which have been absent since their large intervention on Wednesday last week. An apparent lack of complaint by President Barack Obama on Japan's currency intervention is seen as mildly supporting the dollar against the yen. Mr. Obama, who urged Chinese premier Wen Jiabao to take more action on the yuan on Thursday, did not mention currencies when he met with Japanese Prime Minister Naoto Kan, Japan's Kydo Japan intervened on Sept. 15 minutes after the dollar hit a 15-year low of 82.87 yen, selling an estimated 2 trillion yen ($23.70 billion) in Japan's largest single-day yen selling intervention. Some speculate that the authorities may avoid stepping into the markets just below 83 yen as that would appear to confirm market speculation that their line in the sand is 82-83 yen.

Gold

Gold prices traded firm and were steadily inching closer to the $1300 levels as disappointing data from the US renewed concerns over the economic recovery, kept the market sentiment supported. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust said its holdings fell to 1,301.433 tonnes by Sept 23 from 1,304.168 tonnes on Sept 21. However silver investments are on the rise. Holdings in the world's largest silver-backed exchange-traded fund, the iShares Silver Trust rose to an all-time high of 9,582.59 tonnes by Sept 23 from 9,509.55 tonnes on Sept 21. The gold-silver ratio, used to measure how many ounces of silver is needed to buy an ounce of gold, lowered to 61.14, approaching a four-year average of 60.24.

Rupee

The Indian rupee edged higher on Friday as early gains in local shares raised expectations for more capital inflows while an increase in the foreign investment limit in local debt also supported sentiment. It has so far traded in a narrow band of 45.51 to 45.60. The government increased the cap on foreign investment in government and corporate bonds by $5 billion each to $10 billion and $20 billion, respectively on Thursday. This increase in limit is having some impact, but the rupee was likely to trade in a range of 45.50 to 45.70 during the session.

Source: Richcomm Global Services DMCC, Dubai