The American journalist Jimmy Breslin described a school in Queens, New York as ‘designed by architects with honourable intentions but hands of palsy’; the same could be probably said for the financial bail-out plan that is moving through Congress at a snail’s pace. Ben Bernanke, Chairman of the Fed, in testimony to the House Financial Services Committee told them and the world that “action by Congress is urgently required to stabilise the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy”.

He was backed up by President Bush who in a live address to the American people urged them to trust the government and allow Congress to pass the proposal. Some Republican members will vote against the plans as a matter of principle as they struggle to swallow the engagement of a right wing government with state control. Warren Buffett also gave the proposition the thumbs up as he likened the current crisis to an ‘economic Pearl Harbour’.

It seems that Germany’s title of the ’strong man’ of Europe is slipping as confidence falls further. Headline IFO dipped to 92.9 from 94.8 in August with some commentators calling the decline recessionary and that this increases the possibility of earlier and heavier rate cuts by the ECB.

Sterling was unable to take advantage however as market movers wait for news from the US as to the progress on the bail-out plan. A palsy if there ever was one.

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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