Is a Greek debt default really on the cards? Currency market report Sep 12By james tweed • Sep 13th, 2011 • Category: Currency
Significant items this week:
Tues 13th September UK – CPI, RPI
Wed 14th September UK – Unemployment
EMU – Industrial production
US – Retail Sales
Thurs 15th September UK – Retail Sales – Aug revised
US – Industrial production , CPI, Philadelphia Fed manufacturing
Thank you for downloading the foreign exchange market report podcast from Coracle Online and Crossbar fx for September 12th 2011.
Last week was a volatile affair in the foreign exchange market as virtually every day saw a major piece of news which influenced market participants. Some were rumours, such as Greek debt defaults whilst others were facts, such as the Swiss Central bank intervention and the ECB resignations. The overall outcome means that equity markets still fell and the Eurozone’s debt crisis is escalating. This is leading to a deterioration in risk appetite and that in turn means that the USD is strengthening again, as investors take stock of recent movements.
Mounting rumours of an imminent Greek debt default, the resignation of a senior ECB bank official and doubts over the effectiveness of Obama’s US jobs plan all make for a nervous market and that leads to ‘safe haven scrambles’. The Swiss central bank are fed up with their currency being so strong that they have set a ceiling for the Swiss France Euro rate, in an effort to stem flows into its currency. This appears to have worked, for now as investors are now flooding to the Swedish Krona and Norwegian Krone.
The ECB left rates on hold and seemed to abandon its hawkish stance on interest rates, after Trichet warned that the downside risks to the EU economy had increased and that if inflation fell, so too could Interest rates.
In the UK the summer has proved to be a retailer’s nightmare with retail sales down 0.6% in Aug 2011 compared to Aug 2010. Industrial production grew by a nominal 0.1% in July, giving an annual figure of 1.9%. This is pitiful when compared to Germany, who saw a 4% increase in July, and an annual increase of 10.1%. The Bank Of England left interest rates on hold and added no further QE. The latest talk is that they’ll increase QE later on in the year.
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