As Christmas spirit spreads across the country and indeed the world, Sterling has felt the need to sit this one out. It’s a quiet day in the markets but with a little bit of luck the ghosts of Christmas past will haunt the Pound and push it in the right direction.
Pound Sterling – UK Markets
The pound, according to various sources, has risen for the first time in five days after a BoE official stated that he expects interest rates to rise. However, whilst this did prompt us all to flick through the various currency pairings associated with the Pound, we were not surprised to find that the currency still sits at a 25 year low versus the Australian Dollar, lingering in the mediocre 1.17’s against the Euro and flagging ever so slowly against the US currency.
US Dollar – US Markets
The Federal reserve will continue pumping money into financial markets as figures showed the U.S. economy grew less than forecast in the third quarter and inflation unexpectedly slowed.
As with so many other countries in the present climate growth has not been strong enough to cut rates of unemployment, or prevent prices from stalling. However, the outlook for 2011 remains positive amongst top U.S. officials; whether this is purely the spirit of Christmas kicking or is actually progress is yet to be seen.
Euro – European Markets
The debt crisis in peripheral European nations is set to deepen as those already struggling to find buyers for their bonds will face more touch competitions as the region begins issuing new systems to fund Irelands rescue package.
A year ago Poland and the Czech republic were on the verge of joining the Euro and now, in hindsight the decision to delay their entry has been a wise choice. This view is shared by Polish and Czech officials who are now saying the joining the Euro would be unwise unless the region returns to ‘normal’.
Other Currencies – Highlights
Poor news for the Canadian dollar continued into today as mortgage bond sales fell 16 percent throughout the year and is expected to continue into 2011. This ultimately leads to more expensive mortgages for consumers as banks turn to higher-cost funding sources.
New Zealand’s economy unexpectedly fell in the third quarter on the back of the countries earthquake disaster. However, post earthquake reconstruction, higher export volumes and elevated commodity prices, and the positive effects related to the rugby World Cup are expected to help growth in 2011.
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