With the UK in a furious debate over the government’s budget cuts, the US in panic mode and Europe still hanging on by a thin thread it’s down to the rest of the world to pull us back to the surface. But can it be done?
Pound Sterling – UK Markets
Nick Clegg has today come out in defence of the recently criticised government budget, stating that the IFS (Institute for Fiscal Studies) displayed only a ‘partial review’ of the document. Ironically, the Labour party backed the IFS’s analysis. The IFS has called the plans ‘regressive’, noting that the poorest will be hit the hardest.
However, in my opinion, what we are witnessing is more tell tail signs of a high school debate, rather than a heads down approach to tackling the enormous deficit this country is currently faced with.
Due to the backlash, we would have expected Sterling to drop on the face of this news. However, read on and you will see we are not the only ones in a spot of bother.
The GBP / USD rate as of GMT 1050 was 1.5529 whilst the GBP / EUR rate stood at 1.2227.
US Dollar – US Markets
If we were searching for some kind of saviour to leap out of the blue and save the tumbling Dollar we may have to wait a touch longer. A futile day in the US yesterday revealed more negative data with durable goods and home sales both nose diving by 3.8% and 12.4% respectively.
Given the current trends, investors made rapid movements, switching funds into the Swiss Franc and the Japanese Yen. Obviously to the Japanese governments dismay… The US will try to claw back some of the losses seen yesterday as jobless data is released. Hopes are that the rises will soon begin to slow. However, given the surprises of recent weeks I wouldn’t be holding my breath.
Euro – European Markets
My initial question, judging by the market news of today is can Europe provide us with any sparks of inspiration? Well, after Ireland’s downgrade by Standard and Poor’s it appears the waves of recrimination are taking its toll on the euro zone. Greek and Portuguese bonds have taken a battering, reigniting fear of capital flight on the continent.
However, once again, Germany has stepped up to the plate with business confidence increasing to levels surpassing those seen in the past three years.
So, in answer to my initial question, the answer is no… I can’t sit here and gloss over the fact that the three major economies discussed are having a tough time of it. Oh well, at least its Friday tomorrow.
The EUR / USD rate as of GMT 1050 was 1.2703.
Other Currencies – Highlights
The Canadian Dollar has taken the spotlight today. It’s been a tough few weeks for the currency, falling to its weakest level in two months. However, stocks have risen, crude oil climbed and traders boosted confidence suggesting that the recent beating had been exaggerated. The currency known as the ‘loony’ is still being closely watched but rather than end on a sour note, let’s leave it there on a positive.
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