BoE Keep Interest Rates On Hold


 

Currency Market News on BOE Interest Rates, Germany and Greece and the US Non-Farm Payroll Data

5, March 2010

As the BoE  keep interest rates on hold at 0.5%, the asset purchase programme was held at £200 billion. The stronger PMI data this week and the improvement in the revision of Q4 2009 GDP has helped the MPC to be comfortable in their current wait and see policy.

An article in the Telegraph interestingly pointed out that if it was not for QE the UK would still be in recession. That could well be the case. The fact that there was no expansion helped to keep sterling supported just over 1.50 against the USD and 1.10 the euro. We really need to see a move beyond 1.52 before we can start to relax a little.

Over to the ECB and as expected they also kept rates on hold at 1%. They announced that it will continue to scale back their special lending measures as expected and equally as expected Trichet dodged the difficult bullets concerning Greece and gave little away. Yesterday’s Greek bond issue was a real success and this gave the markets a boost backing up the recent austerity measures introduced. The market is aware that we are not out of the woods but this certainly helps. Expect further wranglings with Greece but nice to get some good news for a change.

Today the German and Greek heads are meeting. Should be a spicy meeting after yesterdays comment from the German Economics Minister who said that the German government has no intention of offering Greece “even one cent” and that each country has to take care of its own affairs…..would be nice to be a fly on the wall for this meeting.

Later today we have the big US non-farm payrolls number but even this has lost some of its importance with the appalling weather expected to have considerably distorted the numbers. In a way this could prove to be Dollar positive with the whole community expecting a weak number therefore reaction should only materialise from a surprisingly better result.

Report by Phil McHugh

Currency Market Updates by Tom Nadir

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Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct’s head office and global trading centre is based in the City of London.

The contents of this report are for information purposes only.

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UK Unemployment Rises Again


 

Currency Market News on UK Jobless Figures, EU Anger at Greece and Market Movement

17, February 2010

Jobless claims were up 23,500 against the expectation of a fall of 10,000 so not good feedback for the employment sector. This data for January was disappointing but not wholly unexpected and simply reinforces the fact that the employment sector remains very sluggish.

Although we may have officially exited the recession on paper the reality is that we still have a long a painful road ahead.

The official unemployment rate remains at 7.8%. In addition to the employment data we also had the minutes from the February interest rate meeting for the UK. The Bank Of England minutes came in 9-0 as expected to keep interest rates and Quantitive Easing (QE) on hold. Although all members voted to leave the size of the asset purchase programme unchanged,it was noted that some members felt the arguments for a further increase were “finely balanced”. This underlies the uncertainty within the MPC on the future impact of the £200 billion already introduced and therefore the MPC will not close the door on further QE if required.

Sterling is likely to remain subdued as the BoE feel that inflation will fall further in 2010 and further expansion of QE is a weapon that they will use again if necessary.

Back to Greece and yesterday it was agreed to give the government time to co-ordinate their future policy on their budget. However there was a clear tone of anger from the EU for the shocking handling of their finances to date and they have until the end of March to come up with some answers. The EU also stripped Greece of its voting rights at next months meeting in an attempt to demonstrate their anger towards Greece.

So although no firm agenda or plan in place the markets have started to feel more comfortable or possibly bored with the affairs in Greece and investors once again started to dip their toes in again. The USD and the JPY weakened in line with a tentative return to risk. GBP/USD pushed back through 1.57 and tested 1.58 in early trading and EUR/USD pushed through 1.37.

Report by Phil McHugh

Currency Market Updates by Tom Nadir

Currencies Direct & Forex trading

Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct’s head office and global trading centre is based in the City of London.

The contents of this report are for information purposes only.

BlogCatalog – Finance


 

Will There Be A Deal For Greece?


 

Currency Market News on The Greek Tragedy, Sterling’s Hangover and A Brighter Dollar

11, February 2010

EU leaders are meeting today in an attempt to lay the foundations for a deal to rescue Greece. Lots of speculation already touted this morning. There has been talk of IMF assistance and then IMF involvement without funding. Germany and France are widely expected to shoulder most of the responsibility in supporting Greece.

The most recent feedback is that aid for Greece will depend on Athens meeting its deficit reduction targets this year. This begs the question, “What if they do not?” Lots of fence sitting which is still leaning to reduced confidence in the markets and associated strength of the safe haven currencies such as the USD and the YEN. Expect more volatility as more news and feedback filters through.

Sterling is suffering from a hangover today after a little too much of Mervyn King yesterday. The Bank of England governor killed off the rally in sterling by leaving the door open for a further expansion of the QE programme. However it was not all doom and gloom from King who dismissed fears that the UK would lose their AAA credit status. Sterling still softer on market fear and Kings comments in early trade today.

The USD experienced further gains yesterday as Fed chairman Ben Bernanke indicated that discount rates could rise sooner than expected. This is the charge to banks for loans directly from the Fed. This tone was taken as hawkish even though Bernanke reaffirmed that interest rates would remain low for a prolonged period.

The Feds tone sharply contrasted that of the Bank of England as the US look towards a withdrawal of liquidity and a rise in cash rates with the potential higher discount rates. This reinforced USD strength especially against sterling.

Report by Phil McHugh

Currency Market Updates by Tom Nadir

Contact Currencies Direct for Corporate or Private Transactions. Open an account today and save money.

Currencies Direct & Forex trading

The contents of this report are for information purposes only.


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