Currency Market News on Falling Sterling, UK House Prices and The Greek Situation

26, February 2010

Let us start with the good news from the UK economy before we dive into the bad and the ugly. UK CBI distributive trades showed a good rise in the number of retailers expecting an increase in sales. The number was up from -8 to +23. John Lewis says weekly department sales up 15.1% so good feedback there.

UK GDP revision for the fourth quarter came in at 0.3% and upward revision from 0.1%- better than expected. The pound sell off continues but why has the pound dropped further?

I was bemused on the fall in the pound following the upward revision. I can only attribute it to speculators thinking the data would be stronger than 0.3% and buying the rumour and then selling the fact. Sterling has had a mini run lower over the last week falling 3% against the euro, 2% against the USD and 4% on the Yen.

Mixed economic data will not be helping, particularly UK investment data which was appalling, dropping 5.8% in the last quarter to leave the year on year figure down a whopping 24.1%. In addition Nationwide house price data came in weaker than expected at -1.0% much weaker than the forecasted +0.4%.

News from Greece continued to spread fears of contagion through Europe. The talk of a possible downgrade of the Greek sovereign rating, along with their onerous funding programme, provoked a surge in the country’s bond yields as well as comments from other European worthies.

Remember that a downgrade from current levels would remove Greece’s ability to enter into repurchase agreements with the ECB using their bonds thus cutting off access to the underlying cheap funding. The Greek PM is talking tough stating that those responsible for the crisis must pay and now is the time for decisions and actions for the country.

The mood of fear is still driving the USD and JPY higher.

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 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

Currency Market News on US Interest Rates, The Yen and Obama’s Big Day

25, February 2010

The US to maintain low interest rates world. This was definitely not a surprise but the markets appreciated the affirmation from the Fed which removes any potential near term surprises from the federal reserve interest rates. Equities picked up on the news but risk appetitie is far from returning.

Europe came back to the fore and this morning the markets are in a tailspin of fear again as the threat of a sovereign downgrade looms over Greece. This opens up the possibilty of Grrek bonds being illegible with the ECB, making it more difficult to borrow.

On top of this the war of words will not be helping the euro…hot topics have included the war and Italian book fixing; not good PR for the euro. The Yen is flying in the markets today and has pushed below 89.50 against the USD and pushed GBP down to 136.82 as we stand. The Yen is being favoured as a safe haven after recent strong economic data.

The USD has also experienced gains again today with EUR/USD dropping as low as 1.3449 and GBP/USD to 1.5270 a new 9 month low. Big day tomorrow for sterling in the revision of the Q4 2009 GDP It is expected that it will be revised up to 0.2% from 0.1%- we need as expected or better to stave off further sterling selling.

Today’s important world event is Obama’s meeting with both Democrat and Republican law-makers in the US to try and find a way to move forward on the introduction of legislation of the US healthcare system. The most expensive by a long way, in terms of % of GDP, in the world. Very important that the US move forward on this project and politically vital for Obama.

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 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