Friday 13th…so far so good for sterling
Currencies Direct November 13th 2009 - 2 minute read
Friday 13…so far so good for sterling
Great start to the morning for sterling pushing up against the USD and the EUR as it sterling was largely ignored as the global markets have bigger fish to fry. Tim Geithner the US treasury secretary reiterated his sentiment on a stronger USD; this was supported by the APEC finance minister’s conference which also registered it’s support for the USD and the IMF. However talk is cheap and it is clear that the USD is posing a problem due to recent volatility and weakness. Although the USD gained back from 1.50 to 1.4850 against the euro this move is hardly significant and we can expect further wranglings over the USD during Obama’s visit to China. Sterling nipped higher on the blindside as the markets focused elsewhere.
Euro zone GDP has come in at +0.4% which is slightly weaker than the expected +0.5%; this has not really affected the euro as the data was fairly in line with expectations. Yesterday the ECB bulletin was broadly optimistic and it was maybe the uncertainty on inflation that has deflated the euro. Later today we have the US trade balance and the University of Michigan Consumer confidence to provide more feedback on the US economy- the weaker US dollar should help the numbers.
Recently the relative strength of currencies is becoming an issue for economies. We heard this week Mervyn King talk of the weakness of the pound benefiting the UK economy; the same could be said of the USD. Conversely Japan, Switzerland and economies pegged to the USD have voiced concerns of their currency strength. We now have the Prime minister of New Zealand noting concern on the strength of the NZ Dollar. In the last year the huge volatility and FX movements have certainly changed the dynamics of global markets. With economies battling towards growth the dynamics of fx will be a major issue going forward.
report by Phil McHugh
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.