Figures from the UK services sector reconfirmed what we already new about the state of the UK economy; a dire state typified by the likely winding up of Woolworths and MFI later today. Consumer spending was down to the lowest level in 13 years in Q3 and all will be hoping that the raft of measures brought in by the Chancellor 2 days ago will be able to reverse this trend over the Christmas period.

Data from the US was also poor and increased pre-Thanksgiving volatility with sharp falls seen over home sales, durable goods orders and consumer spending. The number of newly built homes sold fell to a 17 year low while supply continues to increase with price in freefall in many areas while consumer spending slowed to a level not seen since the aftermath of the 9/11 terrorist attacks. Business capital investment has fallen too; a 4.6% squeeze which will have the US manufacturing sector worried for the future as the rate of decline is universally forecast to increase. Consumer confidence was also shown to be lower.

Risk aversion reared its ugly head again as US government debt was in high demand. US t-bills and bonds are viewed as ultra safe at the moment and therefore the demand for dollars is alive and well. We are happy with our predictions made in the past month that dollar strengthening will continue into the early part of 2009 at least.

The EU published their stimulus package yesterday which will comprise of €170bln from the individual member states while €30bln comes from the ECB itself. Doubts emerged however as getting 27 governments to agree will be more difficult than a cat parade with the more conservative governments (Italy, France, Germany) possibly seeking a dilution of responsibilities. Squabbling could of course serve to undermine the euro in 2009.

Data today will be light as it is Thanksgiving and may we wish a very happy holiday to all of our American clients.

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.

To view any past or present currency blogs please click on the following link www.worldfirst.com/blog

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.