Foreign Exchange Report : Risk Is Off The Menu Once More as Federal Reserve Warns of ‘Strains in Global Financial Markets’, Sending GBP USD Rate Downwards
3 Nov 2011 at 6 AM - Written by John Cameron
The Pound Euro exchange rate (GBP EUR) is 1.1607. The Pound Dollar exchange rate (GBP USD) is 1.5904. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5521.
Yesterday’s main event in the currency markets saw the FOMC refrain from altering the US’s monetary policy, in a move which had been widely anticipated by market participants. However, as has consistently been the case with recent FOMC announcements, the accompanying commentary from FOMC policy-makers stole the headlines and moved the markets.
On a positive note, the Federal Reserve’s policy-makers observed that, “economic growth strengthened somewhat in the third quarter,’ in the States. However, the FOMC’s comments regarding the state of the global economy were characteristically gloomy, with committee members noting that, ‘significant downside risks to the economic outlook’ remain. They went on to air specific concerns about, ‘strains in global financial markets’.
Until the publication of these comments, global investors had shown signs of recovering some of their appetite for risk, following the pronounced risk aversion of the early part of this week. This saw the GBP USD rate once again break above the 1.6000 level to touch a daily high of 1.6048 as institutional investors shifted out of the US T-Bill and back into riskier assets. However, this move rapidly turned around following the FOMC’s downbeat assessment regarding the state of the world’s financial markets, sending the GBP USD rate back towards the 1.5900 level by the middle of yesterday's North American session.
The FOMC’s pessimistic message had the additional effect of weakening demand for high-yielding currencies including the AUD, NZD and ZAR. This took the GBP AUD rate back above 1.5500, whilst the GBP NZD rate broke through resistance at 2.0200.
Elsewhere, yesterday's German unemployment figures disappointed, providing investors with further cause for concern for the Eurozone’s leading economy following Monday’s weak German Retail Sales figures.
Meanwhile, there was some encouraging news for the UK economy with the release of this month’s PMI Construction survey, which showed a surprise expansion in the British building industry. If this morning’s closely-watched UK PMI Services survey produces a similarly encouraging result, then the Pound could garner further support.
For other live currency exchange rates and a currency converter see the currency news website.
Foreign Exchange Report : Risk Is Off The Menu Once More as Federal Reserve Warns of ‘Strains in Global Financial Markets’, Sending GBP USD Rate Downwards
Yesterday’s main event in the currency markets saw the FOMC refrain from altering the US’s monetary policy, in a move which had been widely anticipated by market participants. However, as has consistently been the case with recent FOMC announcements, the accompanying commentary from FOMC policy-makers stole the headlines and moved the markets.
On a positive note, the Federal Reserve’s policy-makers observed that, “economic growth strengthened somewhat in the third quarter,’ in the States. However, the FOMC’s comments regarding the state of the global economy were characteristically gloomy, with committee members noting that, ‘significant downside risks to the economic outlook’ remain. They went on to air specific concerns about, ‘strains in global financial markets’.
Until the publication of these comments, global investors had shown signs of recovering some of their appetite for risk, following the pronounced risk aversion of the early part of this week. This saw the GBP USD rate once again break above the 1.6000 level to touch a daily high of 1.6048 as institutional investors shifted out of the US T-Bill and back into riskier assets. However, this move rapidly turned around following the FOMC’s downbeat assessment regarding the state of the world’s financial markets, sending the GBP USD rate back towards the 1.5900 level by the middle of yesterday's North American session.
The FOMC’s pessimistic message had the additional effect of weakening demand for high-yielding currencies including the AUD, NZD and ZAR. This took the GBP AUD rate back above 1.5500, whilst the GBP NZD rate broke through resistance at 2.0200.
Elsewhere, yesterday's German unemployment figures disappointed, providing investors with further cause for concern for the Eurozone’s leading economy following Monday’s weak German Retail Sales figures.
Meanwhile, there was some encouraging news for the UK economy with the release of this month’s PMI Construction survey, which showed a surprise expansion in the British building industry. If this morning’s closely-watched UK PMI Services survey produces a similarly encouraging result, then the Pound could garner further support.
For other live currency exchange rates and a currency converter see the currency news website.
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