Dollar loses ground. Currency report Jan 30By james tweed • Jan 31st, 2012 • Category: Currency
Significant items this week:
Mon 30th Jan US – Personal consumption, expenditure, Personal income.
Tues 31st Jan UK – Consumer confidence, Mortgage approvals
Wed 1st Feb US – ISM manufacturing
Thurs 2nd Feb EU – German Retail sales
Fri 3rd Feb US – Non Farm payrolls, ISM Non Manufacturing
Thank you for downloading this foreign exchange market report podcast from Coracle Online and Crossbar fx. This podcast is for January 30th.
The USD lost ground last week as investors and traders swung back into riskier assets in the hope that a deal would be reached over the weekend between Greece and its creditors and avoid a full scale default. As it stands the private banks and funds that are owed money have nearly agreed a 50% cut in the amount they will be repaid. But the Greeks have rejected a proposal by the Germans that the ECB should have control over their budget. By the time you listen to this there will no doubt be more news.
The USD also suffered at the hand of the Feds announcement last week that they were likely to keep the Interest rates low until 2014 and couldn’t count out further Quantitive Easing.
Gold rose back over $1,700 and funds headed to different currencies in search of a better return. The US economy did pick up in the last quarter, and unemployment dropped to 8.5% from 8.7% – the best it’s been for 3 years, but the Fed also announced downgraded growth forecasts for the next year.
In Europe the reconstruction of Greek debt was the main focus – meanwhile Spain’s unemployment rose to 5 million and the IMF downgraded everyone’s growth prospects across the region. Whether the news is good or bad, the worlds markets await the outcome of the Greek debt discussions and will no doubt extrapolate from that whether it’s ‘risk on’ or ‘risk off’. If the past is anything to go by there will most likely be a bit of both.
In the Far East a significant moment occurred in Japan last week as, for the first time in 30 years, they announced that they have a trade deficit for the past year. In the UK Public Sector borrowing fell in December – down £2.2 billion from the same month a year earlier and the 4th month in a row that it has come in under expectation. The IMF also forecast that they thought the UK growth for 2012 would fall to 0.6% from 1.6% as previously predicted. This didn’t dent Sterling however as the currency rose against the USD.
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