Safe haven currencies gave up some of their gains overnight as Asian stock markets moved higher. Banks and electronics companies led the indices higher as optimism that regional governments would extend efforts to end the financial crisis. The Australian Senate has approved the government’s stimulus package in an attempt to stave off the first recession in 18 years while the Chinese economy is showing signs that the $585bn package they enacted last year. Household and corporate lending has increased since September while GDP is set to increase to 6.6% in Q2 09 against a predicted reading of 6.3% in the current quarter.

With banking shares on the increase naturally sterling has been given a little shot in the arm before the weekend however the momentum with which it declined from its recent highs indicates that a downtrend is still evident.

Data from the US was mixed yesterday with Initial Jobless Claims showing a further deterioration in the labour market as 623k applied against an expectation of 610k. Retail sales were a lot better than expected as the measure showed a 1% increase against a 3% fall in December. This was the first rise in 7 months and could only be put down to aggressive discounting as retail sales still remain poor.

Today is an important day for the euro as European GDP figures for the region and the constituent countries are released.  The day has not got off to a good start for the single currency however as Germany, Europe’s largest economy, saw its economy contract for the third quarter in a row to a level not seen in 22 years. This, we believe, will be solely down to exports falling and a lack of investment. The measure for the EU as a whole is released at 10.00am.

Have a great weekend. 

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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