At risk of sounding mundane, with seemingly inexplicable currency movements over recent days we appear to be returning to relative normality. The euro, with all its issues is still relatively overvalued but in a more sensible position than what we had previously. The US Dollar on the other hand continues to head for the stars (and stripes). Sterling, as we have all become far too accustomed to, remains bang smack in the middle relatively unfazed by its quirky neighbour’s.
Pound Sterling – UK Markets
A continuing theme has seen the property market stagnate even more. New figures have revealed that fourteen homes were sold per UK estate agent in the three months to August. This was the lowest total for more than two years. Economic uncertainty and a lack of mortgage lending led to the sluggish housing market. Furthermore, more surveyors reported price falls rather than price rises in August.
US Dollar – US Markets
Given the state of the overall economic recovery it has come as no surprise that Bank of America is set to cut 30,000 jobs over the next few years as part of a new cost-cutting programme. Put in perspective, the cuts represent 10 percent of the company’s workforce. The cuts are being put in place with the aim of slicing roughly $5 billion a year. With the US already suffering from high levels of unemployment this news comes as a further blow to President Barack Obama who is set to send his $447 billion jobs bill to congress. Despite all this, the US Dollar continues to perform well against most of its major counterparts in a global market that is stagnating.
Euro – European Markets
China could be on the verge of offering Italy a lifeline. The struggling nation is in talks with the Asian nation over a possible sell off of government bonds. This could come at no better time for Italy who has seen the cost of borrowing reach record highs despite already selling off 3.9 billion euros worth of bonds.
Furthermore, the euro fell towards its weakest in a decade versus the yen on speculation Greece is nearing a default. The euro is heavily range bound and is likely to continue to play within relatively tight margins until the potential bond sell off situation is resolved.
Other Currencies – Highlights
Australia’s dollar fell for the fourth day against the yen after a report showed the nations business confidence slid to the lowest level in more than two years. The currency down under, traded 1 percent from a one-month low against its US counterpart, as concern that Europe’s debt crisis will worsen sapped demand for higher-yielding assets.
House of Commons to vote on the EU Customs Union this week