US Dollar:
The Dollar lost ground against the euro and sterling this morning as the UAE Central Bank offered liquidity to support the burden of debt created by its government backed developer Dubai World. The news wasn’t enough to completely ease traders fears over the global economy, as it was also heard the UAE government would assist on a case by case basis, but it was enough to prompt investors in the near future to look to riskier currencies for short term gains, pulling out of the dollar and contributing to its weakness this morning. Rhetoric from Dubai is still thin within the government ordered media blackout, so initial talk of a government bailout will need to be verified before investors are comfortable enough to believe longer lasting effects on the global economy will be limited. We wait to see how this plays out, as well as U.S jobs data on Friday that will be a big driver for overall market sentiment. GBP/USD currently up for sterling at 1.6530, EUR/USD in Euros favour at 1.5048.
Pound:
Sterling is trading down by over 50 points against the Euro since the close on Friday and is slightly lower against the USD. Friday was a quiet day for economic data making today’s data even more significant with the UK’s latest release starting the week off on a bad foot.
Consumer confidence released overnight has shown another dip away from recent improvements at –17 against –11 expected and –13 seen in October. This survey which asks consumers to rate relative level of past and future economic conditions will not spell good news for those in the market anticipating a rapid recovery in the UK. Sterling, has as a consequence of this news started the day trading lower. We also have more economic data due this morning at 9.30am including mortgage approvals expected to rise from 56k to 59k and lending to individuals again expected to rise from 0.6B to 0.8B. Any releases in line or better than forecast may well give sterling a small amount of support but recent news is likely to reduce the prospect of improved data. Tomorrow is an even more significant day for data with key manufacturing news due at 9.30am and forecast to show further expansion (really?). With just 10 days until our friend Darling delivers his autumn budget statement, Brown and his chancellor are battling over tax, public services and the economy. “Relations have become so bad that the two men can now barely agree on a time to meet,” said a Whitehall source. Understandably there are a huge amount of people in the country concerned about what financial “blows” this latest budget will bring. Outlook for UK data remains on the weaker side this week in addition to renewed concerns over the health of our banks. Expect a continuation of this “bumpy ride” leading up to Christmas especially as the market trades in a more volatile fashion as market activity reduces.
Euro:
The Euro was up against sterling and the dollar this morning as investors looked to buy into its higher yields amid a bounce back from the market shock of the Dubai debt news and plans for UAE government assistance, something prompting sales in the euro for short range gains. There is no major euro zone data today that will move the markets; as well as the U.S jobs data on Friday there is a policy meeting on Thursday from the European Central Bank. Whilst rates are expected to remain steady, investors will be watching closely for clues on future changes in monetary policy. If signs are that rate intervention is required on the back of encouraging economic growth, we may see some movement on the single currency. GBP/EUR down
for sterling at 1.0970 currently, EUR/USD shows euro strength at 1.5048 currently.
Quote of the Day
“If one does not know to which port one is sailing, no wind is favourable.” – Seneca
