State of European Banks About to Come to Light

The Euro is being weighed down by the expiration of one year European bank loans from the ECB today that were arranged to curb the crisis. Tomorrow 442 billion Euros is due to be paid back. As the banks will be applying for three month loans today, the amount of these new loans will be will be very revealing about the health of European banks.

Pound Sterling – UK Markets

The Pound has slipped from its seven week high against the US Dollar as investors have sought the traditional safest assets in the run up to the quarter end amid uncertainty about global recovery moving towards buying the US Dollar, Swiss Franc and Japanese Yen over Sterling. New housing data from Nationwide could also have contributed to the Pound’s shake as house prices rose only by 0.1 percent in June despite being forecast to grow by 0.3 percent following a rise of 0.5 percent last month. Various economists however still have a positive long term view for the Pound and the Bank of England Markets Director Paul Fisher has suggested that raising interest rates to help curb inflation is not out of the question. For recent times, the Pound is still trading at very high levels against the Euro at 1.2294 and the Dollar at 1.5016 at 10am this morning.

US Dollar – US Markets

Although the Dollar has clawed back some ground on the Pound, since yesterday morning it has fallen for the first time in three days against the Euro and against eleven other of its sixteen major counterparts. This is before a report due today that is likely to show the nation’s business activity expanded at a slower pace giving more evidence that the US recovery is waning. This adds to US consumer confidence figures for June released yesterday that also came in below expectations.

Euro – European Markets

The Euro has continued to fall against the Pound and the US Dollar since yesterday. There have been some small gains this morning on the US Dollar but the single currency remains in a weak state. Today the banks will be offered new three month loans by the European Central Bank – how much money the banks ask for (which is being announced later this morning) will be a key indicator of their current state of health.

Other Currencies – Highlights

The Canadian Dollar is at its lowest level for three weeks as concern over the situation in Europe drove investors away from higher yielding assets. The Brazilian Real has experienced a five week rally. This is at odds with the President’s efforts to make sure Brazilian exports remain competitive. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000.