Dollar was on the ropes at the Friday close as fears over the US financial sector had participants hiding under the bed. Fannie Mae and Freddie Mac, the 2 largest US mortgage lenders, saw nearly 25% of their respective share prices wiped away over the course of Thursday and Friday as rumours ran through the markets that the foundations of these companies were starting to falter.

The situation hung in the balance with numerous talking heads predicting the eventual plan. Minutes before Asian markets opened last night Treasury Secretary Hank Paulson announced that Fannie and Freddie’s government credit line had been extended to cover any and all problems. Although the announcement has pushed dollar below 1.59 against the euro and below 1.99 against sterling the greenback is still very much in a hole. Notable Wall St. banks Citibank and JP Morgan are due to report earnings this week and we expect further write downs and increased pressure on the USD.

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 Please feel free to contact me (jeremy.cook@worldfirst.com) if you have any questions or thoughts regarding these updates or if you are interested in a particular event in the calendar. If you would like to discuss your foreign exchange requirements, please contact our:Corporate Foreign Exchange Team on 020 7801 9050 or our Private Client Currency Exchange Team on 020 7801 9080.   

Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice.Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms.