Good morning! Any good news coming out from the euro zone, especially from Greece, is proving short-lived. The common currency slid nearly 1 percent today against the greenback and 0.7 per cent against the Japanese Yen in the morning trade today. The USD is expected to outperform the Sterling, the Euro and the Aussie this week.
Friday was a mixed day for the Sterling. The GBP/USD pair started on a weak note of 1.5745 in the morning after Bank of England’s Deputy Governor Charles Bean told British newspaper The Sun that the current inflation of 4.5 per cent will come down in 2012 in time for the Olympics and the economy will witness better growth. He said another ‘dollop’ of quantitative easing will be effective if the economy slows down further. So be prepared to shell out more if another QE is initiated and inflation bites even more before Christmas.
However, by early afternoon on Friday, the Sterling had recovered to touch a high of 1.5841. Unfortunately it failed to sustain the 1.5800 level as stronger than expected US economic data supported the dollar and GBP ended in a loss for the fourth consecutive week.
CURRENCY RATE OVERVIEW
GBP/ EURO – 1.1481
GBP/ US$ – 1.5732
GBP/ CHF – 1.3869
GBP/ CAN$ – 1.5468
GBP/ AUS$ – 1.5340
GBP/ ZAR – 11.8562
GBP/ JPY – 120.84
GBP/ HKD – 12.2635
GBP/ NZD – 1.9115
GBP/ SEK – 10.5442
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Time is running out for Greece as Germany’s Merkel’s Christian Democrats lost for the sixth time in state elections to main opposition Social Democrats. Many believe this clearly shows the German’s disapproval of continued support to Greece. Elsewhere the anti-bailout lobby in Europe that includes Finland, Holland and Slovakia are getting more vocal. The European finance ministers’ meet in Poland also remained inconclusive.
Euro: The GBP/Euro pair hit a low of 1.1477 on Friday while it had started at 1.1395 in the morning. The Ecofin meeting of finance ministers in Poland remained unsuccessful and a decision on further Greek bailout package is expected in October. Euro lost 0.7% against the greenback on Friday.
USD: The Federal Reserve’s policy decision meeting is scheduled for tomorrow and Wednesday. The USD gained 0.1% against the Japanese Yen on Friday though the market is tentatively factoring in another round of QE by the Fed in the coming days.
Elsewhere both the AUD and the NZA gained against the USD on Friday.
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