Good morning and welcome to today’s foreign exchange market commentary on Friday the 11th of November.
Dare we say optimism in the Eurozone?
The political storm in Europe is slowly blowing over with Greece looking in what appears to be a far healthier position. The new Prime Minister Lucas Papademos is ex-Vice President of the European Central Bank and has a much better understanding of how the EU works. Though his appointment is temporary and elections are due around February, still a ‘technocratic’ PM is a much better option than a political appointee. It remains to be seen however, if Mr. Papademos manages to bring in some fresh ideas or if the damage is too deep to be remedied. Nobody should expect a quick-fix solution since there are not any. Ideally Mr. Papademos should immediately start working on ways to make the Greek economy more competitive. A temporary moratorium on debt repayments can also be worked upon to give Greece some breathing space. Endless spending cuts by the government will throw the economy in a vicious cycle of successive contraction.
Meanwhile Italy is also looking better as former European Commissioner and well known economist Mario Monti looks all set to succeed Berlusconi. It’s better to have somebody at the helm that has his priorities right and does not throw ‘bunga bunga’ parties with teenage girls while the entire eurozone is looking at a clear and present danger.
The good news from Italy calmed investor nerves as bond yields dropped to 6.087% and Italy managed to auction the entire €5 billion notes. Though the yield is significantly higher than what the country had managed a month back on 11 Oct, still it’s lower by about 1.4% that was witnessed two days back.
CURRENCY RATES OVERVIEW
GBP/EURO – 1.1671
GBP/US$ – 1.5901
GBP/CHF – 1.4415
GBP/CAN$ – 1.6244
GBP/AUS$ – 1.5710
GBP/ZAR – 12.6581
GBP/JPY – 123.19
GBP/HKD – 12.3754
GBP/NZD – 2.0464
GBP/SEK – 10.6212
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 common currency made some smart recovery against the greenback yesterday buoyed by hopes of early economic reforms in Italy. The EUR/USD pair ended the day at 1.3604 compared with 1.3553 on Wednesday.
USD: Sterling dropped against both the USD and the Euro yesterday after Bank of England voted to keep the interest rate unchanged at 0.5%. A weaker domestic currency is good for the UK since it makes exports competitive, strategy successfully employed by China to build up massive trade surpluses. Cable strengthened against the greenback overnight and the GBP/USD pair opened at 1.5900 this morning.
Elsewhere, the AUD and the NZD continues their losing spell against the greenback. European developments are expected to be the main drivers for the antipodean currencies for next week.
