Cable has moved within touching distance of the key psychological 2.00 barrier as markets began to doubt the effectiveness of the Fannie and Freddie rescue package with higher oil prices also hurting the greenback.  Ben Bernanke is due to start his 2 day semi-annual testimony to congress today and we expect a fairly quiet day on dollar crosses until he takes centre stage.

 The move upwards on cable is solely down to US weakness as data released overnight painted a fairly ghastly picture of the UK growth outlook. The Royal Institute of Chartered Surveyors survey showed that the amount of houses sold on a year on year measure has fallen by nearly 40% and is the lowest figure since the series began in 1978. These falls have seen redundancies in estate agencies as well as homebuilders and related industries; JCB cut 500 manufacturing jobs yesterday and downgraded its production schedule by 20% for the rest of 2008.

Asian trading was particularly volatile overnight with banking stocks on the Japanese and Hong Kong bourses taking a hammering while AUD rose to a 25 year high against the USD as speculators bet heavily on yet another interest hike by the RBA.

Today is a busy day regardless of Chairman Bernanke’s testimony; CPI data from the UK is due to show the inflation picture in the UK worsening (consensus view 3.6%) while in the Eurozone the ZEW business survey is forecast to head lower as inflation problems and continual pain from the credit crunch hurts business sentiment.

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 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.