Snow blankets City
Pound Sterling - UK Markets
The Pound is slightly weaker against the Euro and US Dollar this morning as negative manufacturing data and the Bank of England interest rate decision continue to pressure the Pound. Currently at 1.42 versus the Dollar and 1.10 versus the Euro, the Pound is also down against its European and Australasian currency partners.
Yesterday was a negative day for UK equities as shares in transport companies declined due to the disrupted service and Barclay's shares plummeted after their credit rating was cut by Moody's. Heathrow suffered its worst day since September 11 2001 and labour strikes across Northern oil refineries continued to disrupt production. Official figures show UK manufacturers cut jobs at a record pace in January, with over 30,000 lost and employment prospects remain grim. Predictions this morning claim an extra 2000-3000 businesses could go bankrupt if the bad weather continues and more snow is expected across the UK. There is no further data in the UK today with consumer confidence figures released tomorrow.
US Dollar - US Markets
The Dollar is gaining on the Pound and Euro this morning as both currencies are under pressure ahead of interest rate decisions on Thursday. The Dollar is also up on the Yen and down against the Aussie and Kiwi Dollars.
Iconic department store Macy's is to cut 7000 jobs or 4% of its workforce as a result of recession in the US. GM and Chrysler, having received a $17 billion dollar bail out from Congress, are under increasing pressure to make their industries more viable and justify the Federal expense. President Obama is also seeking to promote US industry and include greater protection against foreclosures in his economic stimulus package that is currently seeking Senate approval. The Washington Post Consumer Confidence survey is released in the US today.
Euro - European Markets
The Euro has declined against the Dollar this morning, down to 1.28 after widespread contraction across the Eurozone manufacturing sector. The Euro has gained against the Pound and other European currency partners.
German retail stales have declined for the third consecutive month and the German economy is expected to contract 2.25% this year. As the largest economy in the Eurozone with a significant export sector, this could place even further pressure on the Euro as we move into 2009. BP has reported a 24% drop in quarterly profits which sent shares plummeting this morning. This comes after Royal Dutch Shell announced a 10% profit drop in the final 3 months of 2008. Terms of the US rescue package have UK and European exporters worried as a ‘Buy America' clause, aimed at stimulating US iron, steel and manufacturing industries, could also promote protectionism. The EMU Producer Price Index is out today with retail sales figures due tomorrow.
Other Currencies - Highlights
The Australian government yesterday took decisive action against ‘severe global recession' slashing interest rates to an historic low of 3.25% and the announcing a $42 billion rescue package. However, this has also created concerns about the growing budget deficit and global recession is keeping the Australian and New Zealand Dollars vulnerable. Downturn in the worlds' major economies has reduced demand for export goods and ensured risk aversion remains a feature of international trading. The New Zealand unemployment rate is released tomorrow.