As the clouds grow darker over the world economy, the continued retreat to safe havens (dollar and yen) was once again evident yesterday. Dollar managed to largely hold its gains against Sterling and Euro but it was the Yen that has looked increasingly strong as global economies look to play catch up with loosening monetary policy stances.

Global equity bourses extended on recent losses throughout yesterday’s trading; however it wasn’t just stocks that were weak. Data out from the UK showed that retail sales have finally weakened as predicted, falling by 0.4% in the month of September. Initial jobless claims in the US yielded a result of 478K, higher than consensus. And Industrial orders in the Euro Zone disappointed with result of -6.6% well below expectations

Staying within Europe, the Swedish Central Bank slashed rates by 25bp to lower the repo rate to 3.75%. The Riksbank’s aggressive decision was 25bps more than expected and adds to the 50 point cut that was affected in unison with other Central banks a fortnight ago.

All eyes will be on the GDP figure from the UK this morning, as the result looks set to confirm the UK as the first European economy to go into an official recession. Consensus is for a shrinking of 0.2%, and Sterling will be particularly volatile today as a result.

Enjoy your weekend

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.

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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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