France, Italy, Spain and Belgium, have imposed a ban on the short selling of financial stocks in a co-ordinated attempt to restore confidence to the market. However, a similar move by US banks in 2008 was questioned by several academic studies, which stated that the banning of short selling rarely achieves its objectives. This morning has seen the release of French GDP which shows that the French economy was flat for the 2nd Quarter, against expectations of a 0.3% increase, increasing the pressure on the Government to find additional spending cuts so that France meets it pledge to have borrowing at 3% of GDP by 2013. The problem is that additional spending cuts are likely to weigh on the French economy in the 2nd half of the year.
Deficit cuts are a problem that George Osbourne is facing in the UK at the moment, as he faces criticism over police cuts and a stagnating economy. The chancellor stated however, that the UK remains committed to deficit reduction and will concentrate on the loosening of employment laws for small companies and the removal of regulations.
US trade data released yesterday showed a fall in both global and domestic demand. Exports showed a steep decline of 2.3%, whilst imports declined to 0.8%. This raises worries about global employment and manufacturing data in the upcoming months. So, weaker US growth, relaxed economic policy and US sovereign downgrade should all lead to USD weakness. However, sterling is suffering from its own problems of stagnated growth, a housing sector which is seeking to de-leverage and, social unrest. The Euro meanwhile is coping with rising concerns over the core, including their banking and financial sector and, record highs being reached on the cost of insuring Italian debt.
All this means that the currency markets are remaining choppy and devoid of direction as the three currencies battle for who is the worst off. Today’s US July retail sales data should be reasonable as the weekly Redbook annual growth rate rose from 3.8% in June to 4.3% in July. So core sales should be solid, even if headline sales are distorted by automobile sales. Manufacturers reported a 6% rise in volumes in July, but if that was driven by heavy discounting then the value of sales, which is what is captured in this measure, might not have risen by anywhere near as much.
What does this all mean for me? Well buying your EUR, USD, AUD or any other currency at the wrong time could cost you a fortune. There is no crystal ball but Currency UK can give you the information you need to make an informed decision.
Posted in Daily Market News on May 30 2014
US Non-farm payrolls, surprised to the upside on Friday and, the readings for May and June were also revised upwards. However, this only provided temporary relief for risky assets as, the S&P downgraded US debt from AAA for the first time in history.VIEW FULL ARTICLE
Posted in Daily Market News on Aug 8 2011 by alex