Good morning and welcome to today’s foreign exchange market commentary on Monday the 14th of November.
The global financial markets are looking a little uncertain with the new (and convincing) leadership in place in Italy and Greece. However, optimism remains due to fresh leadership. Both Papandreou and Berlusconi are gone, for good hopefully. Italy’s new interim Prime Minister Mario Monti – the former European Commissioner, has an unenviable task at hand. He would have to make the difficult decisions of budget cuts, bridge the gap of revenue and expenses by lowering the latter. Something the smart Berlusconi dithered over a long time since it was expected to be a highly unpopular decision. Don’t be surprised if Greek type riots break out in Italy over the next few months. Fortunately Berlusconi’s conservative party has extended its support to the respected economist Monti over forming the new government after President Giorgio Napolitano invited him to take over the country’s reign. Hopefully that will bring some stability to the newly formed government.
Italy’s total debt stands at €1.9 trillion or 120% of its GDP. The country needs to roll-over a little over €300 billion of its debts in 2012 alone and the new economist PM is acutely aware of the challenges ahead.
“In a moment of particular difficulty, Italy must win the challenge to bounce back, we must be an element of strength and not weakness in the European Union, of which we are founders,” Mr. Monti said soon after taking over.
Outgoing Prime Minister Berlusconi – infamous for numerous sex scandals, provided some comic relief when he said he was ‘sad’ his ‘generous gesture’ to step down was greeted with ‘hoots and insults’ from crowds outside the parliament.
He shared pearls of wisdom though, and said the European Central Bank should become the banker of the last resort and guarantor of the currency – currently illegal under EU laws, if the common currency and Europe were to be saved. Thank you very much Berlo! That was too little too late. It’s hoped that you were not merely reading out the speech written by some economist!.
CURRENCY RATES OVERVIEW
GBP/EURO – 1.1642
GBP/US$ – 1.6008
GBP/CAN$ – 1.6256
GBP/AUS$ – 1.5569
GBP/ZAR – 12.63
GBP/JPY – 123.22
GBP/NZD – 2.0388
If your currency pairing is not listed above and you want to make a currency transfer, check out our comparison tables at www.mycurrencytransfer.com for the best foreign exchange rates.
EURO: The euro surged higher against major currencies on Friday as investor’s cheered on hopes that Europe’s debt crisis is heading for some decisive action. The common currency gained 1 per cent against the greenback, wiping out most of the week’s losses. The euro remained 0.4 per cent down over the week and the EUR/USD pair closed at 1.3745 on Friday.
USD: The greenback slid 1.4 per cent versus the yen, the biggest weekly drop since mid-August. Better risk appetite benefitted the GBP/USD pair as well and it opened at 1.6100 today morning. Focus today will remain Italy’s bond auction along with GDP data from Portugal. Analysts forecast a contraction of about 0.7 per cent of its economy. Also expected today is European industrial production data.
Have a great day!