Weakest Link but not much of a game show

Just as global markets show signs of a double-dip recession, encouraging worldwide manufacturing data provided a tiny glimmer of hope. However, one piece of good information does not make a recovery and when looking at the currency markets at the moment it seems to be a race to be the least weak rather than the strongest.

Pound Sterling

Whilst Tottenham managed to clinch a European transfer on the deadline of the global football transfer window, it appears that the window for buying Euros has been slammed firmly shut. Poor manufacturing data hit the local currency hard but with PMI construction data being released today, thoughts are that there could be a small bounce which may boost Sterling slightly. Currently very few analysts are predicting any significant improvements in the short term economy and just to rub salt into an already deep wound, Tony Blair stated that fiscal issues should have been addressed back in 2005. Don’t you just love hindsight… The GBP / EUR rate at GMT 1020 was 1.19970 and the GBP / USD rate stood at 1.53820.

US Dollar

Jobless claims figures are expected to increase in the US as the weaker economy affects the job market. However, yesterday’s data was well received as Supply Manufacturing Data unexpectedly rose to 56.3 from 55.5 in July. Pending home sales appear to be stabilising as well after the post tax rebate plunge, so all in all, investors who have recently been having a tough time of it can take a breather. That said, with a huge amount of data expected over the next few days city traders will be crossing their fingers and hoping for the best. Good luck to anyone who feels they can predict these markets! If in doubt consider buying some or all of your currency now; at least when a deal is done you will be assured of how much it will cost you.

Euro

The ECB is set to release its interest rate revisions today and along side this Q2 GDP figures will also be outlined. However, both are expected to remain firmly at 1%. As we await the predictable ECB decision the single currency has fallen against several major counterparts. The main area of anticipation will be President Jean-Claude Trichet’s tone in his monthly news conference and whether he reveals concerns about slowing growth in the US. The EUR / USD rate as of GMT 1020 was 1.28180.

Other News

Onto more favourable markets, seeing as our three main areas of focus continue to let us down. Way down under, the Australian economy grew at its fastest pace in three years over the 2nd Quarter. We are aware that the currency is driven by commodities and China’s huge demand for iron ore has fuelled growth. Furthermore, the Thai Baht has continued gains as the strongest growing South East Asian currency over recent weeks sparking concerns over its strength. The Thai government is looking into the issue but is yet to make a decision over how to combat the rise.