Daily Archives: September 16, 2011
Yesterday was a prime example of how quickly the currency markets can get turned on their head. It had been looking like the Euro was in a steady decline against most major currencies but this week it has gained 3 cents against the pound.
The ECB came out with comments yesterday that themselves in coordination with the US FED, Bank of England, Bank of Japan and the Swiss National Bank, are to conduct three U.S. dollar liquidity (loans) providing operations with a maturity of approximately three months covering the end of the year. This helped the Euro gain against the Pound & USD and has eased some fears regarding the Euro Zone debt crisis.
The reason for this was due to European banks have been struggling to obtain dollar funding in the last several months as lenders have become increasingly nervous about the euro zone debt crisis and the global economic slowdown. This new move is to prevent money markets from freezing up because of Europe’s sovereign debt crisis.
If you are looking at selling Euros then now may be a prime time as we have moved away from the 7 month highs which we saw at the weekend. (1.17) Now that we are down to 1.1430 you may be prudent to take control of the situation with a forward contract if you do not have all the funds available straight away. The issues in the Euro Zone are by far from over and we are seeing continuous peaks and troughs everyday.
The main concern if you need to buy Euro’s is that although I feel the Euro is very overvalued it was only a few weeks ago that we were trading at 1.10. Now 4 cents higher you must be cautious that we do not slip back to those levels with all the bad data that has come out of the UK economy.
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