US Dollar:
The dollar weakened against sterling and the euro slightly this morning but remained in tight ranges with uncertain news in Dubai that the government would refuse to honour the debt obligations of its largest company, prompting fears that international creditors could be wiped out. It was news that may have been priced in to the market as it is still unclear what effects the Dubai crisis will have on the global economy. A surprise announcement by the Bank of Japan that it will hold un unscheduled policy board meeting in the afternoon led traders to speculate that monetary easing steps may be in the works, a move that gave support to the dollar. Eyes will now be on U.S non-farm payroll data out later this week. GBP/USD currently 1.6520, EUR/USD 1.5060.
Pound:
Sterling is continuing to trade in lower ranges against the Euro this morning hitting a month low of 1.0930. The pound against the USD however, has barely changed with a slight move up to 1.6510. There is lots of general news surrounding the UK this morning including Morgan Stanley’s comments that the UK risks being the first G10 nation to have a full-blown debt crisis and it also emerged last night that the UK is the only G20 nation still in a recession. This feeling amongst the economy of a delayed return to growth is continuing to deter investors decreasing demand for sterling. In further gloomy news for the UK the telegraph has reported that there are concerns that the banking system is facing a credit card time bomb as official figures showed the amount of card debt banks have written off has unexpectedly doubled. This I’m sure will come as no surprise considering how freely banks encourage consumers to spend on plastic and with marketers encouraging us to buy things we don’t need this as they say is a “recipe for disaster”. As concerns linger surrounding Dubai’s debt crisis and our very own one, there is no surprise sterling is under renewed pressure. The data highlight today is Manufacturing PMI which has just come out way under the expected 54.1 at 51.2. This monthly release is an important snapshot of one key area of the economy which down to a weak pound (cheaper for foreigner buyers) should be on the increase. This highlights once again the vulnerability of our economy and the fact some things may not be going to plan for the Bank of England. In some positive news for the housing sector, Nationwide house price index came in better than the 0.4% expected at 0.5%. Expect further weakness for sterling if construction and service sector data also disappoints tomorrow and Thursday.
Euro:
The Euro was up against the dollar and sterling this morning as German October retail sales data was back in the positive, raising hopes for a possible recovery in the fourth quarter. Data released today also showed Switzerland’s economy to be exiting recession with GDP up by 0.3%. Manafacturing PMI data and unemployment rate due today should also give weight to the single currency with positive figures expected. Sterling is feeling the pressure against the euro currently with rising UK house prices slowing down and uncertainty with investors before the Bank of England meeting next week. GBP/EUR currently 1.0960, EUR/USD 1.5060.
Quote of the Day
“Age is something that doesn’t matter, unless you are a cheese.” – Billie Burke
