RBS, HSBC, Barclays Bank being Sued
Worldwide currencies to look out for
- The FTSE fell losing £50bn (-3.7%) as traders were informed of bad news. RBS was the worst performer, dropping 12 %. Barclays lost 6.7% and HSBC lost 3.8 % to a combined loss of $11bn. This is due to being sued by the US Federal Finance Housing Agency over allegations it misled buyers of mortgage portfolios of suspect mortgage packages.
- Eurozone Q2 GDP second estimate consensus looks to see 1.7% and is released at 10.00am.
- German Factory orders expectations are that the figure will be down to around 9.8% from 12.1% the previous month for July which are out at 11.00am.
- US ISM Non Manufacturing analysts expect to see the figure around 51.3, down from 52.7 in July, data for August is out at 3.00pm.
ELSEWHERE
- Analysts worry that Eurozone debt crisis could spiral out of policymakers control this sent the euro lower and forced stock markets in Europe to tumble. Germany’s DAX was amongst the worst hit falling 5.3%.
- Investors opt for USD safe haven as both UK and Eurozone’s economic outlook looks bleak
- Labour Day in the US meant a quiet day for US data and meant US equities remains untouched by the European and Asian sell offs.
- German Chancellor Angela Merkel, fresh off the back of her 5th straight defeat in German local elections, said that Greece would not receive aid payments this month if its rescue package conditions are not met – a statement that crystallized the fears of many market participants and spurred further selling of both EURUSD and European sovereign bonds.
- Today’s meeting between German, Dutch and Finnish finance ministers to discuss the Greek collateral situation could cause some EUR volatility.
- Overnight we had the latest monetary policy decision from the RBA, and as expected the Australian central bank opted to keep rates unchanged at 4.75%, with the assessment that it would be prudent to maintain current policy in light of the uncertainty going on in the global economy.
- Key news today is the Swiss National Bank’s decision to buy unlimited amounts of currency to achieve a minimum exchange rate for Swiss francs of 1.20 against the euro. Yesterday we mentioned after the weekend’s developments CHF was appreciating again and in this dramatic turnaround has seen EURCHF go from 1.1018 to 1.2190 and GBPCHF go from 1.2606 to 1.3817
IN THE UK
- UK PMI Services data falls sharply to 51.1, from consensus 54.3, the importance of the poor figures is highlighted when you consider the services sector makes up 70% of the UK economy. The data showed its largest drop in 10 years, and comes just a week after Manufacturing data showed its fastest contraction in two years
- Chances of further QE are now ‘more likely’ as the economy seems to require stimulation
- Sterling fell around 1% to a 1- 1/2 month low against the US dollar $1.6061
- Against the euro, sterling made slight gains of around 0.1% to €1.1422
- BoE interest rate decision on Thursday may give an indication as to the position on QE
| Current Spot Rates (9.30am) | |||||||||||
| USD | EUR | AUD | CAD | CHF | DKK | NOK | HKD | SEK | ZAR | JPY | |
| GBP | 1.6129 | 1.1379 | 1.5269 | 1.5975 | 1.3661 | 8.4724 | 8.7759 | 12.5760 | 10.32 | 10.37 | 124.393 |
| USD | 1.4188 | 0.9467 | 0.9905 | 0.8470 | 5.2529 | 5.4411 | 7.80 | 6.40 | 6.43 | 77.124 | |
| EUR | 0.7055 | 1.3419 | 1.4039 | 1.2005 | 7.4456 | 7.7124 | 11.05 | 9.07 | 9.11 | 109.318 | |
| Key Support and Resistance Levels | |||||||
| Support | Resistance | ||||||
| GBPUSD | 1.5913 | 1.5960 | 1.6007 | 1.6195 | 1.6242 | 1.6289 | |
| GBPEUR | 1.1013 | 1.1217 | 1.1344 | 1.1494 | 1.1628 | 1.1723 | |
| EURUSD | 1.3874 | 1.3928 | 1.3982 | 1.4200 | 1.4254 | 1.4308 | |
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