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Some encouraging figures around, but Sterling still looks pretty ugly… Oct 22

By • Oct 23rd, 2012 • Category: Currency

The Coracle Online Currency podcast for Oct 22, 2012 in association with Crossbar fx

Tues 23 Oct UK – House prices and BOE Governors speech

Wed 24th Oct UK – CBI Industrial trends Survey
EU – ECB President visits Germany …I guess to check they are happy to keep bank rolling the rest of the Eurozone?
US – Fed Interest rate decision, statement and QE purchasing announcements

Thurs 25th Oct UK – GDP
US – Durable goods orders, Initial Jobless claims, pending Home sales

Fri 26th Oct US – GDP
EU – Germany: Consumer confidence, Spain – Unemployment survey

Thank you for downloading the foreign exchange market report podcast for October 23rd from Coracle Online and Crossbar fx.

Last week was a busy week on the data front with lots of positive and negative news being released, depending on which economy you follow. In the US, the Housing Starts surged to a 4 year high and US Continuing Jobless claims fell , which all gave the view that the US economy is beginning to pick up some support. This in turn saw risk back on and the equity markets take off , despite some poor 3rd quarter earnings results. Positive news for the global economy also came in the form of Chinese data surprising on the upside. Their growth rate slowed to 7.4% for the year, but their exports grew by 9.9% for September when compared to same period last year.

The Euro crises eased a little with the announcement of the creation of a single Eurozone banking supervisor to come into effect in 2013, and more supportive noises coming from the Summit meetings about Greeks austerity measures and other member’s attempts at solving the debt issues. Germany announced that they have lowered their GDP forecast for 2013 from 1.6% to 1%, but have increased this years final forecast to 0.8%, from 0.7%. That doesn’t make up for next years reduction but on a political level someone somewhere must think they can create some positive spin from it.

In the UK inflation has nearly reached the Bank of England target of 2%, coming in as it did at 2.2%. Soon there will be no need for the Governor of the Bank to write to the Chancellor by way of explanation. There was also good news on the unemployment front; the total has fallen to 7.9% / 2.53 million which is 50,000 down in the 3 months to August. Those on Jobseekers allowances also fell to 1.57 million. Retail Sales were up 0.6% in September, making Year on Year figures up 2.5%. Public Sector Net borrowing fell £700m for the month of September to £12.8 billion compared to £13.5 billion for the same period last year. So, reasons to be cheerful. But that isn’t filtering through to Sterling exchange rates. Sterling is down 60% versus the Australian Dollar since 2007, 87% against the Yen, 46% against the Canadian Dollar, 23% against the Euro and 21% against the USD. The truth is that pretty much every currency has strengthened against the Pound since the financial crisis began and this makes everything we import to the UK more expensive and that helps explain our poor growth and economic weakness. It’s also not something the Bank of England can really apply any pressure too.

Thanks for listening