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Darlings comments hit the pound.

Currencies Direct September 1st 2008 - 2 minute read

Darlings comments hit the pound…

Today the pound fell to its lowest point against the USD in the last two years an all time low against the EUR. The negative turn followed an article published by the Guardian on Saturday quoting Alistair Darlings projections for the UK economy and it is not looking bright. According to the Chancellor of the Exchequer the economic downturn could potentially to be the worst in 60 years. As the market is staying clear of buying cable at this moment in time this has a positive impact on the USD in return. It is fair to say that cable is weak because of Sterling weakness rather than USD strength. Nevertheless the Dollar reached an eight-month high against the major currencies. Today the U.S. is closed to celebrate “Labor Day” but nevertheless market participants are expecting an interesting day ahead focusing on the UK and continental European markets.

The New Zealand Dollar slumped today as the markets saw carry trade positions unwinding. The high yielding currency is heavily impacted by the development of the pairing USD and also oil. The Central Bank’s rate decision is not until 11th September and no major real figures are expected to be published either so up until we can expect the NZD to respond to external factors.

Australia’s Reserve Bank is expected to cut its benchmark rate by 0.25pb down to 7.0 percent tomorrow. This move also weighs down on the NZD resulting in a one-year low of just above 0.68 in August.

Risk Aversion is not only having a big impact on NZD but also on the Australian Dollar which almost hit a 11-month low against the USD. Adding to the USD strength is also big sell offs of carry trades.

Across the pond Hurricane Gustav keeps oil traders busy. Although the hurricane did have an impact on the rising Dollar it also pushed up the oil price to above USD449 a barrel as a quarter of the crude production in the US suffered because of Gustav.

The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

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Currencies Direct

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