Risk on Risk off and more currency market news. Dec 3By james tweed • Dec 4th, 2012 • Category: Currency
Significant items this week:
Tues 4th Dec UK – Retail sales
Wed 5th Dec AUS – GDP
UK – PMI Services, Chancellors Autumn Statement
EMU – Retail Sales
US – Factory orders, ISM non manufacturing
Thurs 6th Dec UK – BOE MPC Interest rate decision, Trade Balance
EMU – ECB Interest rate decision, GDP
Fri 7th Dec UK – Industrial Production
US – Non Farm Payrolls
Thank you for downloading the foreign exchange market report podcast for December 3rd from Coracle Online and Crossbar fx.
Last week we saw a lot of decisions agreed by the ECB and its members which has seen the Euro strengthen across the board, despite those decisions being expensive and some say poorly thought out. None of them are actually dealing with the problems at hand. The Spanish bank restructuring plan received the go ahead and the Greeks got their bail out on new improved terms – 1% less than previously agreed and with maturities doubled. It’s a fudge to buy time but does alleviate the problem of the Greeks defaulting. So, crisis one averted… Crisis 2 in the world of the currency markets is the fiscal cliff the US is facing on the 1st Jan when the combination of tax increases and spending cuts comes into effect. This is apparently being dealt with and opinion has shifted to the view that it will be dealt with, but not in its entirety. This is causing a drag on the US Dollar at present and we suspect increased volatility as the date gets nearer and as positions are cleared before the holidays. Risk will be on/off depending how much of the cliff can be negated before the New Year.
Elsewhere the US economy had some mixed numbers published. Durable goods orders were flat for October, but their housing recovery is apparently gaining momentum. US house prices were up 3.6% year on year in September. Housing starts have reached a 4 year high and consumer confidence has jumped to a 4 year peak too. So the US economy is laying the foundations for a recovery – assuming they can sort out that fiscal cliff issue.
In the UK the Chancellor, much to everyone’s surprise, has appointed the Canadian Bank Governor to be the next Governor of the Bank of England. He begins in the Summer of 2013. The news has had mixed reviews but on balance they have been positive. GDP figures of 1% for Q3 were a positive surprise for the markets. All eyes are now on the Chancellors Autumn statement this week and the risks that imposes on the UK’s cherished triple A status.
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