The Pound remained relatively unchanged against the Euro and the Dollar yesterday, the Pound has shed some of its early gains on the decrease in risk appetite, but has remained relatively well supported against its Eurozone counterpart as one of the primary alternatives to the EUR. With no major economic data due in the UK, cable will likely remain divided, gaining against the EUR, but pairing its overnight gains against the USD, at least in the near term.
The Dollar remained relatively unchanged against the Euro and the Pound yesterday paring much of its weekly losses against its higher-yielding peers, but remaining under pressure against “safe-haven” assets. The drop off in risk appetite comes as disappointing earnings reports from the likes of 3M and Netflix drags stocks into the red, and unexpectedly weak economic reports shakes investors’ assurance. A gauge of US consumer confidence tumbled to the lowest since 2009 when the economy was in the depths of a recession, posting a reading of 39.8 versus an expected 46.0 and last month’s 46.4. Limited job availability, home values that continue to decline and the escalating uncertainty in Europe led to the pessimistic outlook. The falling number has consumer goods companies worried just two months ahead of the most important period of the year, the holiday shopping season.
The home price index also fell, registering -0.1% versus the expected gain of 0.2%. Moreover, last month’s relatively strong +0.8% reading was downwardly revised to flat. The Richmond Fed manufacturing index also disappointed, posting a decline of 6.0 versus an expected gain of 1. Finally, stocks and most commodities slumped this morning after a key Eurozone summit scheduled for Wednesday was ostensibly cancelled. Much of the recent risk-on rally had been based on gaining hope that Eurozone leaders were close to resolving the region’s debt problems. But with no meeting to transpire, policymakers’ pledges to solve the ongoing crisis appear to be no more than rhetoric.
The Euro remained relatively unchanged against the Pound and the Dollar yesterday but remains relatively well entrenched towards the top of its recent ranges. The move lower came as risk appetite fell by the wayside, and on renewed fears that Eurozone policymakers are no closer to resolving the region’s debt crisis. However, it does appear that some progress is being made behind closed doors, but with Eurozone leaders asking private holders of Greek bonds to take a 60+% haircut, an easily accepted solution is clearly not at hand. German lawmakers are set to deliberate several strategies that would leverage the EFSF’s total purchasing capacity. However, with all proposed plans inevitably falling heavier on the better capitalized, AAA rated Northern Eurozone members, the willingness of German taxpayers to foot the bill of increasing liquidity remains paramount. “The AAA countries Germany, The Neltherlands, Austria and Finland have signaled that they won’t consider putting up very much in fresh cash,” Austrian Finance Minister Maria Fekter told reporters. “We’re committed to our contribution, but the measures can’t cost much more than that because we’ve got to look after our AAA ratings.”
Data released 26.10.2011
UK 11.00 CBI Industrial Orders (October)
US 13.30 Durable Goods (September)
US 15.00 New Home Sales (September)