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USD and CHF benefit as safe havens

USD and CHF benefit as safe havens

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.

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.

 

Currency UK will then offer you the best exchange rates available and ensure that you subsequent international transfers are handled as quickly and as efficiently as possible.

 

Contact us us now on +44 (0)20 7738 0777 or click here 

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