by Peter Lavelle
Welcome to the Pure FX account of the latest changes in the foreign exchange rates.
This is intended as a brief guide to movements in the exchange rates overnight, to put you in the best position for when you exchange currencies.
Euro
The common currency has shot up against the pound and US dollar overnight, as Spain’s recent rating downgrade only increases the odds of its accepting a bailout in the eyes of investors.
Yesterday, credit rating agency Standard & Poor’s cut Spain’s rating to BBB-, just one status above Junk (the point at which Spanish bonds are completely untrustworthy.) At the time, S&P justified this by pointing to “significant risks to Spain’s economic growth and budgetary performance.”
However, though the euro initially fell on this report, it soon bounced back, as the markets took this and concluded it would force Spain to soon accept a full bailout. As Ivan Delgado, Head of Asian Analysts at FXstreet.com, notes “the market is now pricing in reassurance over the activation of the OMT ECB program for Spain.”
If you’re in the Eurozone and need to repatriate funds either to the UK or United States then, this is beneficial to you.
US Dollar
In the US meanwhile, the greenback was largely unaffected by news that Initial Jobless Claims fell to their lowest level since February 2008 last week, before President Obama took office.
The number of people claiming benefits for the first time (thus reflecting the number of people who have been fired) fell to 339.0k, its lowest point in almost half a decade. This marks a decline of 30.0k on the previous week.
However, though the news may help the Obama presidential campaign, it had little lasting effect on the exchange rates. This is because one week’s data isn’t enough to make lasting conclusions about the state of the US labour market. This could be the start of a recovery in US job creation. On the other hand, it could be a blip.
Coming Up
The question of whether Spain is likely to accept a bailout or not is likely to continue to dominate sentiment today. In addition, in the UK we have the latest Leading Economic Index from Conference Board, as well as the Consumer Sentiment Index from Reuters in the US. All these could see the rates fluctuate throughout the day.
Find Out More
I do hope you’ve enjoyed reading this post. To find out more:
Read our Daily Market Commentary to find out what’s affecting the rates today.
Take a look at our Foreign Currency Exchange Advice articles.
Look through our Top Tips to maximise your foreign currency transfer.
12 October 2012
Foreign Exchange Market Still Awaits Spain Rescue in Spite of Downgrade
by Peter Lavelle
Welcome to the Pure FX account of the latest changes in the foreign exchange rates.
This is intended as a brief guide to movements in the exchange rates overnight, to put you in the best position for when you exchange currencies.
Euro
The common currency has shot up against the pound and US dollar overnight, as Spain’s recent rating downgrade only increases the odds of its accepting a bailout in the eyes of investors.
Yesterday, credit rating agency Standard & Poor’s cut Spain’s rating to BBB-, just one status above Junk (the point at which Spanish bonds are completely untrustworthy.) At the time, S&P justified this by pointing to “significant risks to Spain’s economic growth and budgetary performance.”
However, though the euro initially fell on this report, it soon bounced back, as the markets took this and concluded it would force Spain to soon accept a full bailout. As Ivan Delgado, Head of Asian Analysts at FXstreet.com, notes “the market is now pricing in reassurance over the activation of the OMT ECB program for Spain.”
If you’re in the Eurozone and need to repatriate funds either to the UK or United States then, this is beneficial to you.
US Dollar
In the US meanwhile, the greenback was largely unaffected by news that Initial Jobless Claims fell to their lowest level since February 2008 last week, before President Obama took office.
The number of people claiming benefits for the first time (thus reflecting the number of people who have been fired) fell to 339.0k, its lowest point in almost half a decade. This marks a decline of 30.0k on the previous week.
However, though the news may help the Obama presidential campaign, it had little lasting effect on the exchange rates. This is because one week’s data isn’t enough to make lasting conclusions about the state of the US labour market. This could be the start of a recovery in US job creation. On the other hand, it could be a blip.
Coming Up
The question of whether Spain is likely to accept a bailout or not is likely to continue to dominate sentiment today. In addition, in the UK we have the latest Leading Economic Index from Conference Board, as well as the Consumer Sentiment Index from Reuters in the US. All these could see the rates fluctuate throughout the day.
Find Out More
I do hope you’ve enjoyed reading this post. To find out more:
Read our Daily Market Commentary to find out what’s affecting the rates today.
Take a look at our Foreign Currency Exchange Advice articles.
Look through our Top Tips to maximise your foreign currency transfer.