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UK Claimant Count Jumps to 75.7K
We begin in the UK, where the number of people receiving jobless benefits rose by 75,700 in November, the fastest rise in unemployment since 1991. That brings the total people on the benefit rolls to 1.07 million, the highest level since July 2000. Estimates were for a 45,000 increase, far below where the actual data came in. The Bank of England cut rates aggressively in its last meeting to 2%, in an attempt to bolster the economy which is being ravaged by a recession. UK Bank of England Minutes Show Dovish MPC Today's minutes from the Bank of England revealed that members voted unanimously for the 100-basis-point cut this month. Though they seemed open to the idea of an even bigger cut, there was worry over how the currency markets and financial markets would react to such a move. It could have resulted in an "excessive" drop in the Pound and undermine confidence in the economy. UK CBI Retail Sales Report Continues Declining In a third release, UK Retailers recorded their ninth consecutive month of falling sales during the early build-up to Christmas. A net balance of 55% more retailers said sales were worse compared to a year ago than those that said sales were better. That is the weakest level on record since the survey began in 1983. GBP/USD - Pound Falls to Dollar Following Employment Data, Minutes
The Pound-Dollar pair, which had been surging the last two sessions hit a high near 1.5720 prior to the UK employment release. It then proceeded to fall more than 420 pips to find support at 1.5240. Some of those losses were pared down in the NY session. EUR/GBP - Euro Soars to Fresh Record High vs Pound at 0.9325
The Euro-Pound jumped 290 pips to set a fresh record-high at 0.9325. The Bank of England seems most likely to follow the Fed's lead in continuing to cut rates while the ECB sounds more hawkish. Therefore the Pound is being sold against the Euro by traders who see the potential for future aggressive policy moves from the UK.
EUR Consumer Prices Fall to 2.1%
The final version of Euro-zone consumer prices for November matched the preliminary release from a couple of weeks ago. Since the preliminary release the ECB cut its benchmark interest rate by 75 more basis points to bring the rate to 2.5%. Yesterday though, ECB President Trichet said there a limit to how far the bank can keep cutting rates, striking a hawkish tone and giving the Euro extra strength in currency markets following the Fed's move to a near zero interest rate policy. US Current Account Deficit Narrows More than Expected In the US, the current account deficit narrowed more than forecast in the 3rd quarter to $174.1 billion. The main reason for the jump was an improvement in exports and a decrease in foreign earnings on American assets. EUR/USD - Euro Continues Torrid Pace Against the Dollar
The Euro-Dollar pair roared to another huge gain today, climbing to an intra-day high near 1.4437, which extends yesterday rally to 700 pips. After the move to an almost zero interest rate by the Fed, and growing concerns over the US' rising budget deficits the Dollar has lost its appeal as a safe-haven amid the financial crisis. The Euro seems to be taking this mantle and that has been reflected in the price action seen the past few weeks. USD/JPY - Dollar Slides to 13-Year Low vs Yen
The Dollar-Yen pair meanwhile hit a fresh 13-year low at 87.12 which puts the Dollar about 21% down on the year vs. the Yen. Japan's Prime Minister Nakagawa said the government is ready to step in and intervene in the currency markets in order to help exports which are being hurt by a strong yen. USD/CHF - Franc Surging vs Dollar as Greenback Loses Safe Haven Appeal
The Dollar-Swiss Franc pair fell 450 points today, extending the Franc's gains against the Dollar to almost 1000 this week. As the Dollar loses its allure as a safe haven, the Yen and Franc will take back that role, and is doing so in a strong fashion. Against the Euro, the Franc gained almost 300 pips. CAN Wholesale Sales Fall 1.8%
In our last fundamental release of the day, Canadian
wholesale sales fell 1.8% in October as the auto sector and metals industry
were weak. In terms of the volume of sales, which take price fluctuations into
account, wholesale sales were down 3.6%. This is a negative sign for the
Canadian economy which has been coming under more strain recently
Overnight's and Tomorrow's Releases Looking ahead to overnight, Switzerland will release data on trade and retail sales, Germany will post its IFO Business climate index, the UK will reveal its retail sales along with government spending and the Euro-zone will post its trade balance. Tomorrow, the Us will post weekly jobless claims, the Philly Fed index and its leading indicators. Canada will release retail sales, its leading index and a measure of money flows into and out of the country. |
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