How low can you go?

How low can you go?

Another day and more record lows for GBPEUR – currently at all time lows. This cross is trading in uncharted territory and is struggling to find support with many expecting to see parity before the year is out. However, UK retail sales just out at better than expected levels (0.3% versus -0.6%) should lend support to GBP over today’s session.

UK Unemployment out yesterday would not have helped GBP as the headline figure rose to 1.07m for November; a jump of 75,700 from October. This is the largest rise since 1991 and does little to quell fears of continued redundancies in London in 2009.

Japanese yen has also been in the headlines hitting record highs of 87.15 last night. JPY is currently trading at 87.68 and may well test yesterday’s high again.

Japan’s Central Bank meet tomorrow and there is speculation that they may well cut rates close to zero in an effort to stimulate their economy. Falling global demand has hit Japan’s economy hard as they have such a export focus. Japan’s rate is currently 0.3%.

Economists are also speculating about the ECB cutting deposit rates as soon as today in an effort to stimulate interbank lending. Cutting deposit rates (from current 2% on overnight cash) would make holding cash with the ECB less attractive and hopefully free up capital for consumers and companies and help the interbank market. Ever since Lehmans collapsed banks have been very cautious about lending to one another. The Euribor (the euro interbank offered rate) set yesterday at 3.16 – which is 66basis points above the ECB rate.

In commodity markets, yesterday Opec agreed to cut production by a record 2.2m barrels per day but the price of crude oil has continued to fall. Oil has fallen by more than $100 from a record of $147 in mid July to current levels of $43.21 (Brent Crude in London). Opec has cut production three times since September and Opec accounts for 40% of the World’s oil production.

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.