The Financial update from David Evans, BetOnMarkets.
From 08:00 to 09:00 today we have a series of French, German and European services and PMI announcements.
At 09:30 we have UK retail sales with a drop of 0.5% expected. Keep your eye on the GBP/USD around this time.
It could be a good time for a Financial Fixed Odds Double (Down) Bet on the GBP/USD. Another round of weak UK data could be another nail in the coffin for the beleaguered pound.
Following this we have Canadian retail sales at 13:30. US inflation data is released at the same time.
Early Forex Moves
After last night’s surprise discount rate hike, today’s early trend is strength in the US dollar and Japanese yen.
US Federal Reserve Raises the Discount Rate
Late last night after the Dow Jones had closed, the US Federal Reserve hit markets unawares with a surprise decision to raise the discount rate.
The discount rate differs from the regular base rate and is the rate charged to banks for direct loans from the Fed.
The rate was raised by a quarter point to 0.75. The Fed had intended this to be a signal that the worst of the crisis is passing, encouraging financial institutions to use private money markets instead of central funds.
While the Fed may have intended this to be a sign of strength, so far markets have reacted badly. US stock markets plunged post market, reversing all of the day’s gains from regular trading hours.
Traders have shifted to the US dollar and the Japanese yen and strongly dumped currencies viewed as suspect – namely the British pound.
And the biggest loser this morning, and by a fair margin, is the British pound.
GBP/ USD is down 0.67% while the Pound-Yen market is down 0.75%. This is a continuation of the reaction to the ballooning in UK public sector spending.
After weeks of focus on the Greek economy, fingers are now pointing to the state of the UK’s national finances.
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