Currency report podcast for Nov 12By james tweed • Nov 13th, 2012 • Category: Currency
Significant items this week:
Tues 13th Nov UK – CPI, PPI,
EU – German Economic sentiment survey
US – Monthly budget statement
Wed 14th Nov UK – Unemployment, claimant count change. BOE Quarterly Inflation report
US – Retail sales, FOMC minutes
Thurs 15th Nov UK – Retail sales
EU – CPI, GDP
US – CPI
Fri 16th Nov EU – Trade Balance
Thank you for downloading the foreign exchange market report podcast for November 12th from Coracle Online and Crossbar fx.
Obama wins and for a brief moment the economic reality of the US economy was forgotten. The US has spent $2 billion and an entire year to end up with the same President, the same upper House and the same Senate, which doesn’t bode well for the so called fiscal cliff that’s coming up on 1st Jan 2013. As the law stands a series of tax hikes and spending cuts worth 4%, that’s $600 billion, of GDP automatically kicks in on Jan 1st, so now that there have been no changes in government we can expect this issue to be kicked down the road as neither side can agree on how to solve this recession inducing event, and nor can they let it occur for fear of inducing another credit rating downgrade. There’s only one way out of it: keep printing the dollar bills! So risk aversion is back on and if the US economy goes into recession due to the fiscal cliff it could spell a downturn for the rest of the world too.
A further reason for getting out of the markets and avoiding risk is an increasing focus on the headwinds facing the Eurozone. Greece is back in the spotlight as although they have passed their latest austerity measures through parliament, the latest tranche of funds needed by them is being delayed as the rest of the Eurozone argue over whether the Greeks cuts and the speed of recovery is actually enough, and indeed credible: bearing in mind that so far they have failed to hit each agreed target set by themselves and backed by the ECB. Germany had some poor economic data this week as factory orders fell by nearly 5% when compared to last year. The ECB held rates as expected and the European commission reduced the growth forecasts for the region to 0.1% from 1% for 2013.
The Bank of England kept rates on hold last week and also elected not to increase their QE programme. They have however been found to be undertaking an unusual form of monetary easing – it has emerged the Bank of England has been transferring income from its purchases of government bonds to the government. This is interpreted as further QE and as such the Pound is finding it difficult to hold its own.
Thanks for listening