Recession concerns dominated sentiment yesterday, causing massive falls on most major equity indices worldwide and a continuation of the flight to safety theme seen in the currency markets.

European share markets plummeted with the FTSE, France’s CAC and Germany’s DAX all recording large losses, all but undoing the early week’s hard earned gains.  The US indices actually managed some gains late in the day and the dollar strengthened marginally on the back of this. The big mover of the day was the Korean Won which lost nearly 10% yesterday, its largest one day decline in over a decade.

Yesterday’s data from the US seemed to confirm sentiment that a recession is at foot, with the US Philadelphia Fed manufacturing index plunging to levels not seen since January 2001 and industrial production figures also falling. CPI arrived at 4.9%, down from 5.4% in September. This easing of inflation outlook seems set to continue as oil prices also fell below the $70 per barrel mark, over half the price of July’s lofty highs.

The exchange of 18 billion dollars in options contracts later today may provide some interesting movements as the data due is reasonably light.  The US has Housing starts and Consumer confidence figures due for release while the Euro trade deficit figure looks set to widen this morning

Please feel free to contact me (rick.roache@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.

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

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.

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