Wednesday 9th July 2008

Once again, very little move in exchange rates overnight the only real point of note is the slightly firmer US Dollar on the back of lower oil prices which fell from around $144 a barrel to the 137 region due to the receding threat of Hurricane Bertha heading towards the Gulf of Mexico. This morning, news of Iran’s missile testing has caused the Dollar move to falter and has firmed up both Oil and Gold.

UK Nationwide Consumer Confidence figure fell to lowest figure in 4 years. It was reported by a large retail outlet that more shoppers are heading for the tins of Baked Beans rather than the luxury products consumers were buying 6 – 12 months ago. This is not a good sign for the retail world, especially with Christmas creeping nearer…..unless you are one of the many turning to credit cards to fund your spending needs. It is reported that the average credit limit has risen by over £2,000 to £8,234 and use of this type of funding looks likely to increase over the credit crunch period. Another reason for Retail to call for lower rates.

Onto the Eurozone, German Industrial output dropped for the sixth consecutive month due to a fall in capital goods. Although the economy did grow by 1.5% in the first 3 months of 2008, the strongest since 1996 this is expected to slow down very sharply. Confirmation of a weakening in the Eurozone economy might come with this morning’s release of 2nd quarter GDP figures. A worse than expected outcome could easily see the Euro weaken and Euro/USD head towards 1.5500.

In the US, the lower oil price pushed the DJIA up and the move was cemented by reassurance from Fed Chairman Bernanke that the Central Bank were committed to extending the ‘cheap’ credit facilities to US institutions for the duration of the Credit Crunch.

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