George Bernard Shaw once famously commented that “England and America are two countries separated by a common language”.  Jokes aside, this is pretty accurate of the economic situation faced by these two countries recently.

Equity markets fell across the board due to profit taking from banking stocks and a raft of grim data from the US causing risk appetite to evaporate yesterday. US jobless rolls jumped to a record peak of 588,000 for the week prior, while new orders for durable goods fell for a fifth straight month. New home sales plunged 14.7% to a record low also, well below analysts’ expectations. This increase in risk aversion caused dollar and Yen to strengthen throughout the day as expected.

The Euro was hit hard after consumer and industrial confidence figures from the zone pointed to further weakness in the future. Comments from Jean Claude Trichet that interest rates could fall below 2% and that quantitative easing may be used in the future also provided downward pressure for the single currency

The New Zealand Dollar fell to six year lows, the result was further fallout from RBNZ governors decision to slash rates 150 points on Thursday night. Trade deficit figures also highlighted weakness and a deterioration in fiscal figures added to the woes. We expect further weakness over the short and medium term for the kiwi.

Data out today from the US shows GDP figures, expected to show the US has contracted at an annualised rate of 5.4%. . We also have Chicago PMI and Michigan consumer sentiment readings.

We also have inflation data from the Euro Zone, a result that is worse than expected may see Euros weaken further as this will raise the risk of deflation in the future

All this and more is available on the World First Video Blog, check it out at http://uk.youtube.com/user/WorldFirstJC

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