Persistent rumours circulated that a potential suitor for struggling Morgan Stanley was no nearer to being reached yesterday, and this saw the dollar falling in early trading. Goldman Sachs and AIG also added to the early battering of equity markets across the pond as uncertainty surrounding their financial health continued.

Rumours continued amid speculation that the BoE might provide an emergency rate yesterday in order to support the faltering markets; however Central Banks (lead by the Feds recent decision to hold rates), seem to be showing a clear distinction between liquidity support and interest rate movements.

This was further reiterated as Central banks later announced an $180bn injection of emergency dollar liquidity into money markets in order to alleviate “continued elevated pressures in the US dollar short-term funding markets”. World markets responded positively to this move and Sterling gained on the back of this

The FSA and SEC overnight announced the radical move to ban short selling as of next Tuesday in an effort to combat the financial crisis. Hedge funds seem to be the popular scape goat for the sell down that many stocks have been receiving recently. Many analysts have criticised the move, as the horse seems to have already bolted. While it may help to provide some much needed short term confidence, in the long term it may only further muddy the waters, as this market distortion may not help to address the severe and deep set fundamental problems

US Treasury wasn’t missing out on the action and is working on an emergency plan to buy toxic assets from institutions in order to clean their balance sheets and restore some confidence in the markets. Volatility is assured today as this flood of news is digested by all

  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.

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