Pound Sterling - UK Markets
The Pound suffered another battering yesterday in response to weak producer output figures and ahead of balance of trade data this morning. Having declined against all but the higher yielding currencies, Sterling's downturn was at least part of a wider trend as markets favoured risk aversion again in the wake of the rescue package from China.
Domestically, UK producer output figures fell from 8.5 to 6.8% per annum and Retail Sales figures slowed at the fastest rate in four and a half years said the BRC. These figures are a reflection of low consumer confidence and a squeeze on personal finances in the run up to Christmas and are fuelling speculation of tax cuts by Brown's labour government to stimulate the floundering economy. UK home sales have dropped to the lowest level in 30 years as the freeze on lending sends mortgage applications lower. The Nationwide Building Society showed net lending had declined 70% in the last 6 months
Today balance of trade figures are certain to induce some volatility for Sterling and average earnings data is due tomorrow morning.
US Dollar - US Markets
The US Dollar gained overnight against the Pound and the Euro, as markets favoured risk aversion once again as it became apparent the China rescue package would not save the global economy from downturn.
More major domestic data came from the US yesterday. Federally backed mortgage company Fannie Mae reported losses of $29 billion in quarter 3 and GM shares fell to lowest level since 1946. American Express also won Federal Approval to become a commercial bank, joining Goldman Sachs and Morgan Stanley in light of the recent crisis.
The price of crude has fallen to $57 a barrel following news of China's economic slowdown and the World economic Summit is to be held in Washington on November 14th and 15th.
Euro - European Markets
Despite gaining on the US Dollar yesterday, the Euro closed down against the greenback as risk aversion wiped confidence throughout the Eurozone.
Revised growth forecasts throughout the Eurozone are paving the way for future rate cuts said ECB member Guy Quaden yesterday. ECB interest rates currently sit at 3.25 after the second cut in less than a month. Europe's Dow Jones declined 1.2% as imminent global downturn sent commodity prices lower.
The EMU trade balance is due this morning with industrial production figures due tomorrow morning.