Global Economy in Doubt Boosting Safe Haven Currencies

Currency investors are awaiting several large-scale world events likely to affect markets, with safe-haven currencies the Swiss Franc and Japanese Yen as well as gold benefiting from the uncertainty. The decision on Japanese currency policy, the Australian election, the French budget and the significance of yesterday’s poor US unemployment figures as a sign of global slow-down will continue to play out next week.

Pound Sterling – UK Markets

The Pound has fallen against the Dollar over the last twenty four hours and also the Euro, although is now re-climbing against the Euro so far this morning. In the absence of specific data releases from the UK, Europe and the US today it seems that movements are happening as a result of broader investor decisions on the state of the markets and the global slow down.

US Dollar – US Markets

Yesterday’s US weekly jobless claims have had a huge impact causing risk-appetite to evaporate as the figures came in well below target climbing to a nine month high of 500,000 which was 24,000 more than expected. The Philadelphia Manufacturing business survey for August also dropped 7.7 percent against an expected rise of 5.1 percent. This is used to gage manufacturing conditions within the Federal Reserve Bank of Philadelphia. The figures convey a strong drop in this sector where a rise had been forecast, heightening concerns that the economic slow down is taking deeper and surprising turns. This has reinforced speculation over the chances of a ‘double-dip recession’. This has ironically not bought the US Dollar down as much as might be expected as investors decide whether to use the Dollar as a safe haven.

Euro – European Markets

The Euro is currently sharply dropping against the Pound. The French Prime Minister is preparing the nation for the France’s 2011 budget. Moody’s rating agency have labeled the amount of French debt since the onset of the crisis as ‘significant’ in a report this week and large scale cuts are expected.

Other Currencies – Highlights

The ongoing drama continues to play out between the US and Japanese currencies. As the Yen has continued to strengthen as a safe haven on the back of poor US data, Asian shares have fallen as the economic outlook for Japanese exports worsens. Japanese policy makers have confirmed they are speaking to other G7 countries and are considering whether to take steps to intervene in the currency markets to ease exchange rates. The upcoming Australian election has caused the Australian Dollar to fall on fears the result may result in a hung Parliament. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000