US Dollar:
The Dollar maintained its good run against Sterling and the Euro this morning as concerns over the debt burdens of Greece and other euro-zone countries are weighing on some riskier currencies and encouraging flows back into the Dollar. “I think, overall, the dollar is still the main safe-haven currency in the world,” said David Pierce, director of GPS Capital Markets. “The fact that liquidity is on the light side because of the holiday season is making these moves ever more violent,” said Jacob Oubina, a currency strategist at Forex.com.
Positive economic data has prompted investors to take the view that U.S interest rates are set to rise, boosting the currency. This could end up hurting the Dollar however, as traders sell off their positions to buy into more lucrative options such as emerging markets bonds and developed markets equities. But optimists say a stronger dollar and robust global assets are not mutually exclusive and “the U.S can enjoy such a significant growth premium that more risk taking could be accompanied by a stronger dollar, just as was the case in the 1999-2000 and 2005” Stephen Jen, Chief Currencies Investor at hedge fund BlueGold Capital says. GBP/USD 1.6119, but with technical room to move to 1.6250, EUR/USD 1.4290.
Economic Collapse in America – Victorville Part 1
Economic Collapse in America – Victorville Part 2
Economic Collapse in America – Victorville Part 3
Economic Collapse in America – Victorville Part 4
Economic Collapse in America – Victorville Part 5
Economic Collapse in America – Victorville Part 6
Economic Collapse in America – Victorville Part 7
Pound:
The pound is continuing to trade higher against a weak Euro at the same time as suffering against an in favour USD. In general terms the pound remains under pressure due to a recent batch of predominantly poor economic data in the UK. Today is very quiet on the economic front but not for long, a final reading of third quarter GDP (growth) data is due tomorrow at 9.30am in addition the minutes from the Bank of England’s last meeting released on Wednesday. We are also due the current account deficit figures (difference between import and export) tomorrow morning forecast at –8.1B all before a game of charades on Friday, on a well earned bank holiday for many!
Economists are expecting an improvement in the last reading for GDP to –0.1% from –0.3% previously. The tone from the bank of England on Wednesday will also be viewed with significant importance as many economists and investors will be looking for clues as to when QE (money printing) is likely to end and how much further from the current level of £200bn our central bank is prepared to increase it. Expectations by many are for QE to end in February next year but whilst this is remains speculation, sterling is continuing to be prevented from making any significant gains in the market, especially when considering it’s performance in correlation to UK economic recovery.
Money printing and the affect on UK business (05Nov09)
In separate news I have a new bout of optimism for my team West Ham after their performance against “title favourites” Chelsea. Not only did we hold them to a draw but we were actually playing like winners again and to top it off one of my favourite Indian dish “aloo tikki chaat” I grabbed afterwards beat a recent version I had in Southall, and my master chief girlfriend agreed!
Euro:
The Euro was kept back with its recent losses against Sterling and the Dollar this morning. If upcoming U.S data such as existing home sales show improvement, raising expectations of an end to low interest rates sooner than expected, the Euro could lose further ground this week against the Dollar. Poor UK data last week held back Sterling from building on its gains on the Euro, but events in the Euro-zone, such as the debt burdens on Greece and credit status downgrading in Spain as well have weighed heavily on the single currency, especially as U.S data continues to be positive, leading in investors minds to only one thing- a U.S interest rate rise. The prospect of this is enough to keep traders away from the Euro, some believing a fall to 1.4250 on the Dollar likely if the U.S data is better than expected. Currently GBP holds firm against the Euro at 1.1257, EUR/USD down to 1.4290 currently.
Budget deficits putting Euro currency under pressure (14Dec09)
Quote of the Day
Tough times never last, but tough people DO – anon
