Daily Market Comment

20.11.2008

Risk aversion is keeping the dollar and yen in pole position on forex markets, with recessionary fears intensifying in line with growing concerns over the US auto industry. Fading hopes for a rescue package from Washington weighed, as gains by the safe haven pair were fuelled by a further sell off in stocks, with US indices seeing losses of up to 5% and the Nikkei finishing its trading session off almost 7%. With investors focusing on a slumping real economy and weak earnings, European stocks are predicted to fall again today.

Weekly Market Brief

14.11.2008 WEEKLY MARKET BRIEF 14TH NOVEMBER 2008

Key Data for Week 17th - 21st November 2008

Central Bank Watch

06.11.2008 ECB WATCH - 6TH NOVEMBER 2008

The European Central Bank cut rates by 0.5% today, bringing the total reduction in official rates in the eurozone to 1% in the past month. It was a missed opportunity for a bigger ECB rate cut as the BoE slashed rates by a whopping 1.5% today. Another 0.5% rate cut seems likely in December. With the economy now in recession, inflation on the wane and interbank rates still elevated, ECB rates should be cut to at least 2% in 2009.

Exchange Rate Monthly

14.11.2008 Exchange Rate Monthly - November 2008

The dollar has proved itself to be remarkably resilient over recent weeks as the economic newsflow from the US has also turned more negative and markets anticipate a further fall in US interest rates. In the current environment, we expect the dollar to retain its bullish stance, in particular versus the euro and sterling. A move to $1.20 is possible versus the euro and $1.40 versus sterling, with dollar funding demands likely to spike upwards again to facilitate end year activities.