Tuesday, December 21, 2010

Daily World Market Update : Moody's puts Portugal's rating on review for possible downgrade

It was a bit of a dead day yesterday, frozen by the cold, and there were little important releases which would affect the exchange rates. Today in the UK we are seeing November’s public finance figures which could show that the government are no longer on track to meet its fiscal forecasts. The housing markets continue to have difficulties as mortgage approvals moved up from 44,000 in October to 45,000 in November, this is down 26% from November 2009. While trading at the FTSE was light, there was a rise thanks to utility stocks. Noticeably the arctic temperatures had damaged BA shares and some high street retailers such as Marks and Spencers, presumably due to the inability to reach the shops due to the snow.
Nick Clegg has increased pressure on Cameron by saying that the government would not stand by if Britain’s banks paid out large bonuses but did not increase lending. This comes at the same time as the news that one in ten bankers and traders in the UK and Europe could receive no bonus at all this year thanks to weaker revenues.
Germany’s Producer Price Index rose only 0.2% which was under was expected, the same was to be found year on year, but at least the figure had risen to 4.4% from 4.3%. The Organisation for Economic Co-operation and Development published a downbeat survey of Spain yesterday, where they mentioned Spain should not only reform its labour market and keep cutting its budget deficit but also liberalise product markets to make itself more competitive. They did credit Spain for moving in the right direction but a scope for improvement remains. Meanwhile Vice Premier Wang has suggested that China will help the addressing of the eurozone debt crisis, which gave euro a boost. It fell around 40 pips against the dollar after the statement by Moody’s that Portugal could get downgraded.
The decision yesterday by the National Bank of Hungary to raise interest rates will add to rising tensions in the country, after the surprise rate hike last month they shocked again by a rise to 5.75% when no change was expected.
It is a busy day for Canada today but all is quiet elsewhere, things of note for ‘the True North’ are CPI and Retail Sales. In the UK we see Public Sector Net Borrowing and the expected growth in the borrowing levels could prove negative for sterling. Germany has its consumer confidence survey and Switzerland’s Trade Balance came out at 1.928B this morning.

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