Markets Search for the Bottom

February 19th, 2009

USD Mixed Overnight

The US dollar lost some ground to most majors except the Japanese yen overnight as equity markets in Asia and Europe rallied.  The yen has been an interesting story this past week, as poor GDP figures and political upheaval in Japan seem to be stripping the lustre off their safe haven status.  The Japanese central bank opted to keep rates on hold last night at a measly 0.1%, but did warn that their downturn could end up being worse than those in the US and Europe.  The Euro was bid up overnight as the big players in the EU, Germany especially, said they would support measures aimed at helping the rest of the Eurozone with their financial difficulties. Read Full Article »

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Risk Aversion Dominates As Markets Tumble

February 16th, 2009

UK Inflation report takes it toll

Another rocky week for sterling saw mixed data releases and safe haven buying push it back and forth like prime ministers question time. What looked like a beacon of hope for the retail industry was then well and truly quashed by the Bank of England’s inflation report. A deep recession is upon us if we didn’t already know it but the outlook for the next year was patchy to say the least. In a rather heated debate Mervyn King outlined that their predictions are the best in the business but he sealed sterling’s fate with the inkling that they are prepared to start printing money if needs be. Sterling went in to free fall on the back of these comments. Lloyds bank also hit the headlines with record losses and a mere 30% fall in share price hit the pound. We can expect even more volatility as the CBI has signaled that we are in our worst economic slump since 1980. Manufacturing data will dominate the headlines this week as it is evident that it is demand hitting the sector and not credit woes. Tuesdays Inflation data will show another fall towards that magic 2% target but last weeks inflation report really put the Bank of England on the back foot. Mervyn king sealed its fate by saying ‘Im not pretending everything worked well, it clearly didn’t’. More aggressive rate cutting looks highly possible and this will continue to weigh heavily on the pound. Read Full Article »

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