FX report for Nov 7By james tweed • Nov 9th, 2011 • Category: Currency
Significant items this week:
Tues 8th Nov EU – German – Trade Balance
UK – Industrial/Manufacturing output, Retail sales for Oct.
Wed 9th Nov UK – Trade Balance for September
Thurs 10th Nov UK – BOE MPC Interest rate meeting
Thank you for downloading the foreign exchange market report podcast from Coracle Online and Crossbar fx for November 7th 2011
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Last week, the Yo Yo effect on the foreign exchange markets, as politicians made decisions and then reversed them, is best summed up with the line… “It’s been emotional!” First we had the G20 – and offers of solutions and handouts, haircuts and austerity. The Greek Prime Minister thought about a referendum, then didn’t; thought about resigning, then didn’t; and finally dropped the whole idea and kicked the debt can down the road. Let’s face it, telling your population that huge wage cuts and high taxes are on the agenda for the next 10 years to effectively end up where you are now is not going to get you many yes votes come an election. But he’s not the only one with this problem… like a Mediterranean bush fire, it’s spreading across the dry warm southern members of the EU. If you are Silvio Berlusconi then apparently you don’t think Italy has a problem, but the financial sector sees a Euro 300 billion shortfall to pay off the interest due on the bonds which come to fruition in 2012. Astonishingly that’s the worlds’ 3rd largest amount of debt. We suspect that when Italy comes looking for money they will find that no one is happy to lend with the current “accountant” in power.
Meanwhile. the US Dollar enjoys safe haven status once again and employment figures continue to show that there is movement. Factory orders increased for the 3rd month in a row.
The Chinese are wondering when to put their $3,000 billion foreign exchange reserves into use, and the Australians cut interest rates, thereby weakening the Australian Dollar.
In the UK, GDP for Q3 came out at 0.5%, so a slight improvement on the previous Quarter. But we are beholden to the Eurozone it would seem and if the debt crisis fails to be effectively dealt with, it makes pulling out of a recession nigh on impossible. There is an extended period of uncertainty to endure and that will keep things in the foreign exchange markets volatile.
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