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British Pound ContinuedTitle:
Franc advances as SNB halts peg announcements
The Swiss franc halted its decline against majors as the SNB stopped talks about pegging the franc to the euro or setting a targeted rate.
Today, said it would raise sight deposits to 200 billion francs from 120 billion francs, repurchase outstanding SNB bills and adopt foreign exchange swaps, and it revealed that may take further measures if needed.
However, these measures were reckoned as weak compared with expectations to see a target level or pegging to the euro.
Concerning the EUR/CHF pair, it fell after four days of advance to trade around 1.1412, where it recorded a high of 1.1547 a low of 1.1219.
Moreover, the yen also showed advance against majors except the franc while the dollar dropped against a basket of major currencies to 73.65 compared with the day's opening level of 73. ...
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Euro retreats on sluggish 2q growth pace
The European common currency slipped against majors after reports showed that euro area growth, led by Germany, eased more than analyst's forecasts.
Euro area 17 nations' pace of growth eased in the second quarter as the GDP index declined to 0.2%, below estimates of 0.3% and the first quarter's expansion of 0.8% as the escalating debt woes weighed on confidence.
In Germany, Europe's largest economy which used to lead the pace of recovery in the region, recorded a drop in second quarter GDP to 0.1% from the revised 1.3% which was 1.5% initially.
Fears and worries returned once again to markets as worries increased the sluggish growth pace would continue this year, where some of the hopes that spread yesterday after the better-than-expected contraction in Japan lost its effect.
The ...
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Safe haven currencies lose ground
Safe havens lost their advance seen over the past couple of weeks as the Swiss franc dropped after the SNB unexpected cut to interest rate, the yen fell on expected further easing in monetary policy to halt the currency's appreciation, and the dollar slipped after Moody's warned that the U.S. top rating is still at risk of a downgrade.
First, the Swiss franc, which has been the biggest winner last year as it benefited from the escalating European debt crisis which triggered haven demand, dropped sharply against majors following the unpredicted cut in the three-month Libor interbank rate to a range between 0.00-0.25 percent compared with the prior 0.00-0.75 percent range.
In addition, the SNB said it would increase the supply of francs in the market over the next few days to halt the ...
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Worries spread in market on worsening growth outlook
The jittery sentiment is still prevailing markets as the approval of the U.S. debt ceiling increase and cut in budget deficit plan revived concerns the U.S. will lead global economies into sluggish growth.
The Senate will vote on the plan today, yet the slowdown in manufacturing growth in July by global major economies ignited fears the sluggish pace would continue in the third quarter.
Yesterday, data released showed from global economies showed that Chinese manufacturing growth slowed to 50.7 in July from the prior 50.9. European manufacturing showed further decline in July where it recorded 50.4 in July from 52.0, while U.K. manufacturing sector contracted to 49.1 in July relative to the revised 51.4. In the U.S., the reading retreated sharply to 50.9 from 55.3.
Accordingly, ...
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U.S. debt-ceiling increase deal boosts confidence in markets
The jittery sentiment that prevailed last week with the delay of U.S. debt ceiling decision ended this week with the U.S. debt deal which included the increase of debt ceiling by $2.1 trillion and cut in the budget deficit by $2.5 trillion over the coming 10 years.
Meanwhile, there is some optimism in markets which enhanced demand on high-yielding currencies at the expense of refuges, except for the Swiss franc that remained firm against majors.
In addition, the better-than-expected Chinese PMI manufacturing reading helped the bullish sentiment as investors reckoned the three interest rate hikes by the Chinese central bank did not have much impact on growth.
On the other hand, the downbeat manufacturing data from the euro area and U.K. did not have negative impact on both euro and ...
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Weekly Economic and Financial Commentary : 29/07/2011
Weekly Economic and Financial Commentary
U.S. Review
Subpar Economic Growth Defines the Second Quarter
The economy grew at a sluggish 1.3 percent in the second quarter after growing a mere 0.4 percent in the first quarter. Stagnation in personal consumption expenditures in the second quarter suggests that higher prices played a role in restraining consumer spending.
Consumer confidence unexpectedly rose in July as the number of people expecting conditions to improve six months from now climbed on the month.
Data on the housing market this week continued to reflect the weakness in the housing sector.
Subpar Economic Growth Defines the Second Quarter
This week we learned that the U.S. economy grew a sluggish 1.3 percent in the second quarter of the year after expanding only 0. ...
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Spain's possible downgrade and U.S. debt ceiling delay reinforce demand on refuges
The jittery sentiment continued in the market on Friday trading with Spain's credit rating put under review for possible downgrade by Moody's and U.S. officials delayed the vote on the debt-limit raise plan.
Moody's mentioned that "pressures are likely to increase still further following the announcement of the official package for Greece, which has signaled a clear shift in risk for bondholders of countries with high debt burdens or large budget deficits.”
On the other hand, U.S. policy makers resumed their discrepancy regarding the raise of debt ceiling which increased speculations that the U.S. will fail to resolve the problem before an August 2 deadline which will make it prone to a downgrade as well as possible default on debt obligations.
The yen was the biggest winner followed ...
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U.S. debt ceiling and European debt concerns trigger risk aversion
Tensions over the raise of U.S. debt ceiling and European debt crisis concerns reinforced demand on refuges, where the yen was the biggest winner as speculations increased the BoJ will not intervene in foreign exchanged market until the resolve of the U.S. debt ceiling problem.
Today, there will be a vote on the plan proposed by House Speaker John Boehner, which was amended to involve the cut of $917 billion over 10 years. While his proposal was met by prominence from fellow Republicans, it is expected to be rejected by Democrats.
Speculations that U.S. policy makers will fail to reach an agreement before an August 2 deadline are increasing with the undergoing indecision.
On the other hand, European debt concerns were reignited after S&P lowered Greece's credit rating to CC ...
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Europe Ahead: Focus still on Europe with one eye on the debt crisis and the other on U.K. inflation
Markets started the week with heavy pessimism and negativity with the deepening jitters over the prospects for slowing global growth and the deepening debt crisis, which reflected with heavy losses across the board.
Yesterday the euro area finance ministers failed to ease the spreading jitters and tension and the worries that the crisis has intensified and knocking on Italian doors.
The end of a long Brussels meeting was not as productive yesterday as their promise to provide cheaper loans to Greece with longer maturities and more flexible terms failed to ease the woes as they did not dismiss the possibility of default.
The ministers said in the statement the "Ministers stand ready to adopt further measures that will improve the euro area's systemic capacity to resist contagion risk, ...
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