The currency blog

The volatility in the FX markets over the last 24 hours has been staggering! The main economic events yesterday were related to the UK and European central bank decisions- however this was not the driver for the volatility. The main ingredient was fear the exact location was GPS…Greece, Portugal and Spain. There was a scramble for safer shores in the USD and the YEN and out of the euro and higher yielders and to some extent the pound as panic swept the markets. Escalating debt concerns are increasing in these European economies and this drove stocks and commodities lower- debts spreads between the good eggs and bad eggs widened considerably and could increase further.
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Today the markets will be focused upon the interest rate decisions from the Bank Of England and the European Central Banks. First up is the BoE- the markets will be waiting to see what the MPC do with QE- the UK asset purchase scheme. Will they hold firm at the current level of £200 billion? Will they expand by a further £25 billion? Or will they signal the completion of the asset purchase- or at least pause? There are valid arguments for all scenarios, however I feel that the most likely scenario is that the Bank will not extend now but leave the door open for future extension if deemed necessary. For sterling any signal on further extension would be negative and any closure or pause should be positive.
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The time has come for us to decide upon the next charities for people to support in the office. As before suggestions were submitted and a list of 27 charities were passed around for the vote. This has given us a list of 9 democratically chosen charities for us to support over the next 3 months. All the charities are worthy causes and cover a very wide spectrum, which should make donating over the next 3 months really interesting.

The winners of The Big Charity Vote 4, along with the score they received are below in order of the month we will be supporting them:

March
Help a London Child - 116
Epilepsy Research - 89
Born Free Foundation - 61

April
Diabetes UK - 86
Honeypot - 60
Stepping Stones - 45

May
Face The Future - 53
David Shepherd Foundation - 49
Smile Foundation - 49

There will be some exciting opportunities this year with CSR so please watch this space for more details!!

Not too much to report today in relation to economic data with the focus looking forward to tomorrows interest rate decisions from the Bank Of England and the European Central Bank. There is a possibility that the completion of the Quantitative Easing programme will be announced for the UK- however the ever cautious MPC will likely leave the door open for more if deemed necessary. Either way a pause or a cessation in QE should be largely beneficial for sterling in the short term. The statements following the respective decisions from the BoE and ECB will again be the highlight as future policy sentiment will be predicted by the markets.
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Excerpt from the British Red Cross - Haiti Earthquake Appeal website www.redcross.org.uk

“A devastating earthquake measuring 7.3 on the Richter scale struck Haiti on 12 January 2010, killing an estimated 50,000 and affecting at least one million people. The situation in the capital Port-au-Prince and other nearby areas is dire, with hundreds of thousands of people in urgent need of assistance.

As well as distributing vital supplies the Red Cross is providing medical aid and water for survivors.”

Following this devasting natural disaster, Currencies Direct employees decided to donate all proceeds from events in January to the British Red Cross - Haiti Earthquake Appeal. The company pledged to match the amount raised so we were poised for a high donation contribution in January!

We had the usual Dress Down Fridays each week, and also a sponsored Morph run by Jamie Lesinski. This run involved Jamie wearing a skin tight bright pink all in one suit and running around the office. I’ve been assured his intentions were for good not evil and he raised an impressive £62.18 in sponsorship money. Well done Jamie - I only wish I had been in the office to see it!! This photo surely doesn’t do you justice.

The total amount raised in January was an impressive £266.50 which when matched by the company meant a whopping £533 for the victims of the earthquake. This also pushed the co-operative wall total up to £4747. A PAT ON THE BACK FOR EVERYONE IN THE OFFICE WHO CONTRIBUTED - WELL DONE!

The charities that we were originally collecting for in January - Shelter, Street Child and Mencap - we will now be supporting in the month of February.

Thank you for reading!

The relative performances between the major economic power-houses indicate that the US Dollar and Sterling should continue to improve against the Euro and Yen for the short term at least with the presumption being that the improvement in performance for both economies can be traced back to their recently acquired, more competitive exchange rates. Large moves in the next day or so, do look limited however, given the upcoming monetary meeting in Europe and the UK and given that much of the Euro’s recent weakness has been as a direct result of negative news from Greece. It has to be assumed that most, if not all, the bad news has been priced in by markets now and the currency might be set for a bit of a lift as it benefits from an increase in risk appetite. The Euro itself looks unlikely to surge however, given the likelihood of IMF intervention in Greece’s affairs and for those precious metal aficionados out there, it is worth noting that at present, Greece holds over 71% of its foreign reserves in gold, which at the end of December stood at just shy of $4 billion. Watch the gold price after the IMF have been in …..
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