Currency report Feb 27By james tweed • Feb 28th, 2012 • Category: Currency
Significant items this week:
Tues 28th Feb EU – German consumer confidence, German CPI
US – Durable goods orders
Wed 29th Feb UK – Consumer confidence, Consumer credit
EU – CPI, German unemployment
US – GDP 4th Quarter
Thurs 1st March EU Economic summit, Unemployment
Fri 2nd March EU – PPI
Thank you for downloading the foreign exchange market report podcast for February 27th from Coracle Online and Crossbar fx.
Although structural problems remain within the Greek economy, the imminent danger of a default in March was averted last week by another 130 billion Euro bail out. Greece still has to get nearly all of the 206 billion Euros of debt held in private hands to take part in the debt swap to start receiving the bailout funds, but as ever they remain confident. The Euro strengthened across the board as investors look beyond the current uncertainty in the Eurozone’s periphery economies, even though the leading light in the Eurozone (Germany), posted a 0.2% contraction in their economy last quarter. Ratings agencies downgraded Greece to junk status C, which means a default is highly likely in the near term. And yet the Euro lives on and reached a 3 month high against the USD!
In the US, the markets focussed on positive earnings reports and glimmers of hope in housing and labour markets, which offset unease about rising Oil prices and the unease surrounding Eurozone bailouts. Everyone is looking on the bright-side, but this time there is, it appears, more of a backward glance at what is really happening on the ground. The politicians have agreed many things, but on the streets unrest is bubbling over in the Eurozone, and sabre rattling by Iran and Israel is raising tensions in the oil markets, as well as militarily.
Sterling began the week on the back foot, dropping a couple of cents against the USD, but when the announcement was released that the MPC at the last Bank of England meeting was split regarding how much QE there should be, the Pound weakened and continued to do so for the rest of the week. Some members were arguing for more than the agreed £50 billion. On a positive note, January saw the biggest surplus in the public accounts for 4 years. Public sector borrowing currently stands at £93.5 billion compared to £109 billion at the same time last year.