The Euro was hovering above a two month low against the USD this morning and dropped to its lowest ever level against the CHF. The weakening of the Euro against the safe havens of the USD and CHF indicates that a return of risk sentiment is currently gripping the markets, which, is further supported by Sterling’s inability to strengthen against the Euro at the same rate as the USD and CHF, and, the record highs seen in the Gold market.
Weakness in US manufacturing, the recent decline in Chinese Flash Manufacturing PMI and the sharp drop seen in yesterdays European PMI all point towards a slowing of growth in the world economy. This has led to safe haven buying, and, in the near term it is likely that the Euro and, Sterling will continue to be weighed on by the USD.
The other reason for Euro weakness is, of course, the Sovereign debt crisis. The ratings agency Fitch yesterday lowered its outlook for Belgium debt. Worries also, persisted about the local election results in Spain and what the crushing defeat for the ruling socialist party would mean for the current austerity measures.
In the UK, today’s public sector borrowing is the first of the 2011/12 fiscal year. We should see some improvement on the April 2010/11 figures, given the tax rises coming in over the month. Expectations are for net borrowing of £6.5 billion, compared to £7.2 billion in April last year. The CBI Distributive Trades survey for May is also released later today. This will be interesting to see how far sales are slumping now Easter and the extra bank holidays are behind us.
In the US this afternoon, new home sales for April are expected to remain flat on the month, at 300,000. The Richmond Fed manufacturing index is expected to decline slightly in May.
Posted in Daily Market News on May 30 2014
The Euro crashed against both the USD and Sterling in Friday afternoons trading, as, concerns over sovereign debt returned to the markets. Norway, suspended a grant of $42m to Greece, because, Athens did not fulfil commitments and may have broken rules relating to the aid.VIEW FULL ARTICLE
Posted in Daily Market News on May 23 2011 by alex