The sterling falls for a second day against the greenback on renewed concern the financial crisis in Europe will be prolonged.
- The cable slid against most of its major counterparts after reports showed that Lloyds Banking Group had been forced to abandon a move to withdraw from the UK government's asset protection plan.
- Mervyn King, the Governor of Bank of England said this week that policy makers may lower the interest rate paid to hold reserves at the central bank. According to the British Bankers' Association the cost of three-month loans in sterling between banks fell for a 13th day spurring speculation that traders sold the pound to fund investments in higher-yielding assets.
- The pound fell to as low as 1.6356, over 200 pips from yesterday's high of 1.6567 against the dollar and is remains under selling pressure today below the pivot point at 1.6450.
- The US dollar made a comeback against 15 of the 16 most-active currencies, renewing demand for the greenback as a safe haven currency, as Asian stocks declined. The decline in Asian equities came after Aiful Corp., Japan's third-largest consumer lender by revenue, sought to reschedule debt payments and lower metal prices.
- The euro fell from near a one-year high against the dollar, ahead of next week's G-20 meeting in Pittsburgh, as proposals on restructuring the banking sector are being pushed onto the agenda. Jose Barroso, European Commission President, said yesterday that Europe needs continued low interests rates and government stimulus measures to keep the recovery on track.
Currency to watch out for: EURGBP & USDCAD
- The EURGBP pivot point is at 0.8937 with a preference to enter into long positions above 0.8937. Some analysts believe that we could see 0.9800 by year's end and parity by in the first quarter of 2010.
- The USDCAD pivot point is at 1.0640 with a preference to enter into long positions at 1.0650.
Today's calendar and market movers:
- EU Current Account expected to rise to -4.3 billion
- UK Public Sector Net Borrowing expected to rise to 17.5 billion
- Canada Wholesale Sales month on month expected to rise to 0.8%
Now onto Stocks:
- US stocks edged lower after a three-day run-up on concern that recent gains were overextended despite the latest round of solid economic data. The major indexes finished lower 0.08% to 0.3%.
- As of 06:05 GMT the Nikkei is trading at -0.7% and the Hang Seng at -0.3%.