FX Market Overview
Monday was pretty wild as traders speculated over the efficacy of the proposals surrounding the Euro financial stability facility (EFSF). Even the acronym is a mouthful. The EU and IMF are talking about a two trillion euro fund to let Greece off some of its debt and stop the rot elsewhere. Any fund with twelve zeros in it ought to be a positive in these circumstances but this seems to be little more than a redistribution of debt and a re-allocation of loss so it's a little hard to see how it will solve the problem. The plan is a bit ‘marmite’ (you love or loathe it) and within Germany, that debate is even more polarised. The latest news is that the EU will use the fund to act as a deposit to allow them to leverage the sum and control much larger tranches of debt. It’s certainly an option and one that is creating a lot of debate. It is also causing plenty of volatility as analysts and traders try to determine whether the plan will a) happen and b) work.
That volatility saw sterling take a stab at the top of its current trading range against the euro and against the commodity affected currencies. So we saw the pound hit highs against the Australian, New Zealand and Canadian Dollars and make headway against some others.
Some of that strength petered out overnight as the profit takers took their opportunity. Consequently, the Pound dropped three cents against the NZ Dollar and the Australian Dollar. Against the Euro, Sterling is holding up rather well; balanced as it is around the €1.15 level. The Pound is also pressing higher against the US Dollar after a wildly volatile day yesterday. However, the pound did fall from $1.66 to $1.53 over the last month so some kind of recovery is to be expected. US Dollar buyers will be hoping this is a more substantial recovery and not just a profit taking bounce. Events in the Eurozone will probably make the decision for them.
Against the Canadian Dollar, the Pound appears to be trapped below C$1.60 (it’s a psychological barrier but holds little importance otherwise) and it is finding support at C$1.55.
Today's data diary includes the Confederation of British Industry’s retail market report and consumer sentiment indices from the US and Germany but speeches are still the driving factor in the markets.
Away from the markets, in a radical plan which may well rock the teaching establishment, pupils sitting their GCSE exams may be docked up to 12% of the total marks for poor spelling, punctuation and grammar. What is most shocking about this outrageous new plan is that they are working towards apply this to English Language exams. It does pose the question though that if spelling, grammar and punctuation were not already being tested; what was it that these poor pupils were being taught and what in fact were they being tested on? Quote It's a strange world of language in which skating on thin ice can get you into hot water. Franklin P. Jones
