Fears of a Double-dip Recession

As the new coalition government continues to make changes, Ministers will meet today in an effort to prevent strikes after treasury figures suggest that there could be over 600,000 public sector job cuts over the next five years in an effort to reduce the budget deficit. With these cuts likely to go ahead, many suggest that strikes could be inevitable.

Pound Sterling – UK Markets

The Pound today fell down over 40 points against the USD from levels of 1.52 and a further 10 points from Friday’s opening price of 1.5173. However, as volumes being traded are very low there is little trend for experts to report on. This appears to be due to the US Bank Holiday which has brought their markets to a stand-still. As of GMT 1000 the GBP/USD rate was at 1.5152, whilst the GBP/EUR retreated a little further to 1.2081.

US Dollar – US Markets

The Dollar index, which measures the major currency against a basket of six others fell to its lowest levels in just under two months on the back of some worrying jobs data coming out of the US. The main concerns surround the private sector, which in June took on a mere 83,000 new employees, falling short of initial expectations. Fears remain strong that the US may be heading for a disastrous double-dip recession and this anxiousness appears to be affecting the markets in a negative fashion. The nations Independence Day will undoubtedly keep markets on the thin side throughout the duration of the day.

Euro – European Markets

The Euro has retreated from six week highs against the Dollar amid speculation interest rates will be kept low with an aim of reducing the budget deficit. However, such moves will only dampen economic growth. This was reflected in the news that the Euro has weakened against 14 of its 16 major counterparts. Major players in the continent have defended the decision, insisting that the Euro remains too weak to warrant an increase in interest rates. At GMT 1000 the EUR/USD exchange rate stood at 1.2544.

Other Currencies – Highlights

The Australian Dollar ended a five day fall against the Yen and the USD as job advertisements climbed for a second consecutive month in June. Ongoing concerns about the levels of unemployment in Australia have been eased slightly as employment levels rose for a fourth consecutive month in June. The Reserve Bank of Australia is set to maintain benchmark interest rate levels at 4.5% tomorrow although levels in the US and Japan are as low as 0% and 0.1% respectively. Asian currencies have gained amidst speculation that global investors are looking to push more funds into regional assets as confidence surges through the economy. The main players in the improvement have been the Won and the Ringgit.