Sterling enjoyed some light relief yesterday against all sixteen most actively traded currencies, trading above 1.14 on the Euro and 1.62 on the US Dollar. Today see’s risk aversion creeping back into the market as the uncertainty over Portugal’s bailout and the possible downgrading to AAA negative on USA sovereign debt by Standard & Poor. The global stock markets have reacted with the Dow Jones and Nasdaq closing down over 1% yesterday and the European stock markets already down over 2%.
The head of the Belgium Central Bank Coene said “The interest rates we had were maybe appropriate when we were in the depth of the crisis but probably are not appropriate anymore”. Eurozone policy makers are still talking about further interest rate hikes in the coming months.
All eyes will be firmly on the release of the Bank of England MPC minutes released tomorrow which is expected to show a 6-3 vote on increasing interest rates.
China’s Central Bank increased the revenue lenders must hold by a further 0.5% to a record level of 20.5%, the fourth time this year in a bid to restrict lending and curb inflation. It is thought that a total of 350bn Yuan will be held in reserves.
The Kenyan Shilling strengthened against the US Dollar as the Central bank intervened in the market buying up the shilling in a bid to tame inflation as oil prices soar.
Douglas Palmer
“Any opinions expressed in this document are those of TorFX analysts. Any analysis and/or forecasts provided are aimed at helping clients understand market conditions and developing trends. Clients are wholly responsible for their own trading decisions.”
