Commodity rally sparks a move on the major currencies

Late trading yesterday on Wall Street and in Asian equities pushed up commodities; crude oil moved up 3.4%, copper and Gold also gained. This reflected increased risk sentiment in the markets. This helped lead to the usual swings in the markets with the USD and Yen broadly sold; EUR/USD pushed back up to 1.41, GBP/USD pushed over the 1.66 resistance level to a high of 1.6743 and GBP/EUR pushed through 1.18 to a high of 1.1850.

Sterling is also being underpinned by healthy data out overnight and this morning. UK Gfk consumer confidence data came in at -25, this is the highest reading in 15 months; in addition UK nationwide house price data was penned at +0.9% month on month. The house price data was a nice surprise for sterling as the market was expecting a drop of 0.5% following the 0.4% drop in May- naturally the report is still noting caution on the data but it does add to the sentiment that we are seeing a bottoming out in house price falls. Expect a little caution on sterling ahead of the GDP data at 09:30, if we see a good number here we could test further on the upside against the EUR and USD.

Look out for data from the US later in the form of consumer confidence and the Chicago Purchasing Managers Index, again if we see good data this should help the risk appetitie sentiment and fuel further sellling of USD. We also have the Tankan survey from the Bank Of Japan later tonight which highlights forecasts for growth in the manufacturing sector, this is released against the backdrop of the jobless rate in Japan posting a 5 year high. An improvement is expeceted but given the weak jobless data and improved sentiment we could see the Yen weakne further along with the USD.

Yesterday Bernard Madoff the disgraced financier was jailed for 150 years for orchestrating the $65 bn fraud. The heavy sentence is a little pointless given that he is 71 years old, however it does reflect the severity of the crime and certainly sends a message to would be fraudsters…