We saw dollar regain some of it composure yesterday as a number of factors went its way. Oil prices fell close to the $130 a barrel mark for the first time in 3 weeks, Wells Fargo posted better than expected figures in a week where banking shares have been crucified and Ben Bernanke spoke of currency intervention in his testimony to the Senate Banking Committee.

Wells Fargo is the 5th largest bank in the US and although it posted double digit profit declines through Q2 they were not as bad as analysts expected; the bank being insulated somewhat by its previous cautious lending profile and as such its relatively small exposure to the toxic sub-prime mortgage market.

Ben Bernanke in testimony to the US House of Representatives commented on currency intervention as ’sometimes justified, but only rarely’. Any sign of intervention is an obvious catalyst for dollar buyers but all in all the shift was over before it had a chance to get going as market participants still bet down the dollar as the US economy continues to falter.

Sterling was in a hesitant mood yesterday as unemployment figures disappointed. We are still well short of the unemployment problems that we faced in the early 90s when the economy was decidedly banged up although the figure released yesterday was the largest jump in benefit claimants since December 1992. The majority of these redundancies were seen coming from companies and sectors affiliated with the housing market and the problems therein.

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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.