Daily Insight

Once again Senior Traders Adam Solomon and Luke Trevail analyse the news in the currency markets and look ahead to what might happen on the trading floors in the coming week.

This week:

• Mervyn King's Comments on Sterling


• The Eurozone's economic resistance


• JP Morgan's gloomy predictions

If you have any questions or comments about this Podcast please leave a comment below or call TorFX now on 0800 612 9625.

Please Note: Every effort is made to ensure the accuracy of the information contained within this communication, however TorFX cannot accept liability for damage caused by error, omission, or inaccuracies. This podcast is intended for general information and interest purposes only. Any opinions expressed are those of the individuals featured, and do not represent advice or inducements to trade.

Labels: currency, news, podcast

The Pound bounced back from an all-time record against the Euro yesterday and also rallied from the weakest level in six years versus the Dollar as investors judged its recent declines as excessive considering the increasing likelihood that other central banks will match the pace of the Bank of England’s rate cuts.

The UK currency rose towards 1.1900 against the Euro by the close of trading last night, while the Pound also bounced back above $1.5000 versus the Dollar as Sterling enjoyed the biggest gain of all the 16 most actively traded currencies despite losing 24% against its U.S counterpart this year as the economy heads towards a recession.

There is a growing sense in the market that last week’s decline was overdone and the Pound’s bounce against the Euro was exacerbated by ECB policy maker Axel Weber who said that policy makers may lower borrowing costs beyond the current 3.25% in an attempt to boost the economy.

The declining outlook for the Euro indicates that yesterday’s move may be more than just a consolidation as a technical indicator some traders use to forecast price direction bounced above 30 to indicate a rebound was forthcoming.

The Pound also rallied as much as 2.2% versus the Dollar to record the biggest gain since October 29th despite reports from the Confederation of British Industry that said the economy will contract 1.7% in 2009, while Rightmove Plc confirmed house prices slumped by the most since records began in 2002.

The average asking price for a home in Britain declined 7.1% from this stage in 2007 and the apparent weakness in the economy is reflective in the dwindling value of the Pound and that may prevent the UK currency from sustaining any positive momentum in the market.

UK stocks declined yesterday led by a drop in retailers and construction-related companies after Britain’s biggest business lobby said that the economic slowdown in the UK may be much deeper than earlier than predicted.

According to the report from the CBI, UK gross domestic product will contract 1.7% in 2009, the most since 1980 and the catalyst for the Pound’s decline was the omission from the governor of the Bank of England who conceded that the UK economy is already in the grip of a recession.

Investors are still speculating that the Pound will decline to 1.1000 versus the Euro, while finding support at $1.4000 against the Dollar and therefore buyers of either of these currencies would be well placed to take advantage of the current rate bounce or at least place a stop order to protect against further losses.

According to a chief economist at JP Morgan & Chase Co, the Pound will drop 14% against the Dollar to trough at $1.2800, a level not seen since 1985, and a further 9% versus the Euro as the rising unemployment rate continues to hamper an economic recovery.

The Bank of England have reduced interest rates by 2% between October and November with the current benchmark lending rate is at the lowest level since 1955 and policy makers are expected to cut it another 50 basis points on December 4th with the governor Mervyn King prepared to do ‘whatever is necessary.’

The global financial crisis has prompted banks to scale back lending as the cut in borrowing costs will try and spur capital but mortgage approvals held near a record low in September and house prices have declined by 15% last month, the most since at least 1983, according to the biggest lender HBOS Plc.

In addition, UK unemployment rose by the most since 1992 last month and the BoE is prepared to reduce interest rates as low as necessary to prevent deflationary pressures from becoming entrenched in the broader economy.

The annual pace of UK inflation was at 5.2% in September and is expected to slow to an average of 2.8% in 2009 before dropping to 1.2% in 2010 and the figures released this morning are forecast to confirm that consumer prices slowed for the first time since August 2007.

The Dollar fell against the Euro and the Pound yesterday as a contraction in U.S manufacturing added to recent evidence that the world’s largest economy has fallen deeper into a recession.

Factory production in the New York state contracted in November at the fastest pace on record as a global slump in demand curtailed orders, while sales plunged as the index fell to a reading of minus 25.4 and the report also emphasised that a slump in lending is forcing manufacturers to trim output.

The decline in sentiment is just the latest indication that the economy is shrinking as the Commerce Department reported last week that retail sales fell 2.8% in October, the most on record, signalling that the intensifying weakness will further discourage producers and force them to slash prices.

Elsewhere, the Dollar also came under pressure after Citigroup Inc, the U.S bank with the most employees, plans to cut more than 50,000 jobs over the coming months and cut expenses by up to 20% from their peak as the global economy falls into contraction.
Data Released 18th November

U.K 09:30 Consumer Price Index (October)

- Retail Price Index

U.S 13:30 Producer Price Index (October)

- Ex Food & Energy

U.S 14:00 TICs Capital Inflows (September)

U.S 18:00 NAHB Housing Index (November)

written by Adam Solomon

Following on from last week, recent negative rhetoric from the Bank of England undermined confidence in the Pound to the degree where Sterling fell to the lowest level on record against the Euro and sank to 6-year low versus the Dollar.

The UK currency suffered its biggest weekly decline against its European counterpart since common currency’s debut in 1999, consolidating just above 1.1600 on Friday, amid mounting evidence that the UK economy is in the grip of the worst recession since the end of the second World War.

The catalyst for the Pound’s monumental decline came on Wednesday as Mervyn King, the governor of the Bank of England, appeared reluctant to rule out the possibility of cutting interest rates to zero per cent, while the rising unemployment rate will make it harder for the UK to spend its way out of a recession.

The Pound also lost an unprecedented 5.1% in value against the Dollar to trade under $1.4600 on Friday and investors will continue selling the Pound until it reaches the major support at $1.4000 as the weakness in the UK economy and falling inflationary concerns gives policy makers the premise to reduce rates further.

According to recent estimates from the Bank of England, the UK economy will contract by an annual 1.8% in the first three months of 2009, while inflation will slow and breach below the government’s 2.0% target as traders continue to drive the price of oil towards $30 a barrel.

In a sense, King’s comments last week were a veiled endorsement for the Pound’s decline to act as a way to revive the struggling economy, while MPC member Andrew Sentence said that the Pound’s slide against the majors will make it easier for manufacturers to cope with a recession.

The Pound’s recent performance against the Euro suggests that the market doesn’t think the European Central Bank will cut interest rates as aggressively as the Bank of England and with UK fundamentals continuing to deteriorate, Sterling weakness is likely to persist over the coming weeks.

In the wake of King’s comments and the subsequent reaction in the market, the Prime Minister Gordon Brown urged the opposition to be "responsible" in commenting on the Pound after an interview with George Osborne in the Time newspaper.

At the G-20 summit in Washington, Brown told reporters that it would not be sensible for him to comment on exchange rates after Osborne, who is responsible for the Conservatives’ economic policy, warned that the government runs the risk of triggering a "collapse" in the Pound.

His comments are the first from a senior UK politician to raise the spectre of a currency crisis that is becoming comparable to those suffered by Britain in 1970s and early 1990s or to indicate that the Pound may suffer a similar fate to that of the Icelandic currency
following the collapse of its banking system.

The Pound has lost more than a quarter of its value in just four months, declining from $2.00 in July to less than $1.50 last and the UK currency has dropped 20% against the Euro in the past month, a trend similar to the Pound’s performance versus the Deutsche Mark in September 1992.

In terms of UK economic data, the focus this week will fall on the headline consumer price index on Tuesday and the report is forecast to show a sharp decline from September’s 5.2%, further easing concerns about the upside inflation risks.

In addition, financial markets will also be paying particular attention to Wednesday’s minutes from the Bank of England’s November policy meeting where the MPC slashed interest rates by 1.5%, the single biggest move in 27-years.

The tone and language used in the report as well as the voting pattern should provide further insights into how low the Central Bank are prepared to cut interest rates and the Pound will probably come under further selling pressure in the build up to the report.

The Euro’s momentum against the Pound is showing few signs of slowing despite European stocks retreating for a second successive week as the German economy sank deeper into a recession than initially forecast, the U.S scrapped plans to buy mortgage assets from banks and the declining oil price sent energy shares tumbling.

The European economy is sinking further into its first recession since the introduction of the Euro in 1999 and a number of financial institutions including Deutsche Bank AG and Citigroup Inc say that growth will fall further into negative territory and won’t return until late 2009.

The downturn in sentiment leaves policy makers scrambling to limit the depth of the recession and the ECB is poised to cut interest rates again next month, while other governments are lining up fiscal stimulus problems, their efforts may come too late for the recovery from lagging behind that of the U.S.

The Federal Reserve’s proactive response to the global credit crisis means that the U.S is currently well ahead of the curve compared to Europe and the UK and that is reflected in Dollar’s overwhelming appreciation in the market.

Data Released 17th November

EU 10:00 Foreign Trade Balance (September)

U.S 13:30 Empire State Index (November)

U.S 14:15 Industrial Production (October)

- Capacity Utilisation

written by Adam Solomon

The monumental decline in the value of the Pound shows signs of accelerating as the UK currency slumped to yet another record low versus the Euro, falling to 1.1548 at the close of trading last night, amid mounting evidence that that the UK economy is entrenched in the worst recession since the end of the Second World War.

The Pound also consolidated under $1.5000 against the Dollar for the second day in succession, plunging to a low of $1.4561 on the session and to the lowest level in more than six years following reports that BT Group Plc announced a 6% reduction of its workforce in the year through March.

The U.K’s largest phone company will cut roughly 10,000 jobs out of a workforce of 160,000 in an attempt to improve profitability after reporting a dramatic slide in second quarter earnings, which fell 1.3% to £1.43 billion in the fiscal second quarter.

The alarming increase in the UK unemployment rate has led to speculation that the Bank of England will keep cutting interest rates as the economy slumps and Sterling weakness may persist for another two of three quarters according Geoffrey Yu, a currency strategist with UBS AG, the world’s second largest foreign exchange broker.

The Pound has slumped to the lowest level since June 2002 versus the Dollar and the sour economic outlook in the UK is reflective of the Pound’s recent performance against the majors, a trend that is unlikely to turn over the coming months.

Since reaching a high of $2.1157 earlier in the year, the Pound has lost 25% in value against its U.S counterpart, while the UK currency has also fallen 15% versus the Euro and investors are speculating on the possibility of Sterling sliding to $1.2500 versus the Dollar by March 2009.

The Pound has also recorded another record low versus the Euro and investors are anticipating the market falling below 1.1000 over the coming weeks, which would be equal to its all time low versus the Deutsche mark when taking the old German currency’s value at 1.95583 per Euro, the level at which it was replaced in 1999.

The Pound’s 14-day relative strength index against the Euro, a technical indicator that some traders use to forecast changes in price direction, was at a level of 24.07 yesterday, below the level of 30 that would signal a rebound and the last time the index fell below this threshold, Sterling rallied for eight days starting September 3rd.

Bank of England policy maker Andrew Sentence, who as recently as July spoke about the need to combat inflation, said yesterday that the Pound’s recent slump against the Dollar will make it easier for manufacturers to cope with a recession.

His comments coincide with the recent dovish rhetoric of the chairman Mervyn King and it appears increasingly apparent that the Central Bank is waiting to see how low the Pound can go before the market will require intervention.

Elsewhere, the Chancellor of the Exchequer Alistair Darling echoed the gloomy outlook for the economy and he will forecast in his pre-budget report later this month that the recession won’t be over until at least 2010, the Independent reported him as saying in an interview this week.

Despite the government’s initial optimism, the UK is headed for the steepest and most prolonged recession out of the G-7 countries, while the Bank of England look set to implement the sharpest cut in interest rates with some investors speculating on the possibility of zero per cent by the end of 2009.

The strong element of risk aversion that is beginning to saturate the market also saw the Australian and New Zealand Dollar decline heavily against the majors, while UK stocks also dropped for a third consecutive day and oil prices slumped, as traders sought the security of safe haven assets.

Crude oil prices fell to a daily low of $54.67 in New York and traders are betting on the price hitting an unprecedented $30 for February delivery despite threats from OPEC, the supplier of about 40% of the world’s oil, to cut output and revive prices from the lowest level in nearly two years.

The Euro’s advance against the Pound shows few signs of abating but the single currency also made unlikely gains against the Dollar yesterday despite reports that the German economy entered the worst recession in at least 12-years.

Gross domestic product in Europe’s largest economy contracted by more than initial forecasts to a seasonally adjusted 0.5% from the second quarter and the last time that growth fell this far into negative territory over two consecutive quarters was in 1996.

The Euro initially came under pressure in the aftermath of the report, dropping to a low of $1.2388 versus the Dollar amid speculation that the ECB will have little option but to lower interest rates from the current 3.25% and the IMF predicts that G-7 economies will contract simultaneously next year for the first time since World War two.

Data Released 14th November

EU 10:00 Flash GDP (Q3)

EU 10:00 Harmonised Index Consumer Prices (Final – October)

U.S 13:30 Export / Import Prices (October)

U.S 13:30 Retail Sales (October)

- Ex Autos
U.S 14:55 Michigan Sentiment (November Prelim)

U.S 15:00 Business Inventories (September)

written by Adam Solomon

The negative sentiment surrounding the Pound took on a fresh impetus yesterday as the UK currency slumped to a fresh record low against the Euro and breached below the $1.5000 level versus the Dollar for the first time since 2002 after the Bank of England indicated that policy makers will keep reducing interest rates.

The Pound also plummeted against the lower-yielding currencies as a strong element of risk aversion crept back into the market, which was evident with the reaction in the U.S stock market as the Dow Jones sank towards the October lows.

The statement from the Bank of England also indicated that the annual pace of UK inflation will slow “well below” the 2.0% target over the coming months and that will provide policy makers with yet further scope to slash interest rates from the current 3.0%.

When asked by reporters yesterday whether policy makers would take rates to zero, King replied that the MPC “are prepared to cut the bank rate to whatever level is necessary” in order to prevent a recession from fuelling deflationary pressures and bring inflation back towards target.

The Bank’s monetary policy committee elected to slash interest rates on two occasions over the past month, reducing the benchmark lending rate by 1.5% in November to the lowest level since 1955 and yesterday’s omission from Mervyn King suggests that they are well behind the curve and quick action is necessary.

The declining outlook for the UK economy is putting the Pound under massive selling pressure as a government report yesterday showed that unemployment claims rose to the highest level since March 2001 and added to recent evidence that the economy is entrenched in a recession.

The number of people out of work and claiming benefits has increased 36,500 to 980,900, the single biggest monthly increase in 16-years, and the report follows a pretty gloomy assessment by the Prime Minister Gordon Brown, who said that the nation should prepare for the worst as the economy stumbles towards contraction.

His comments mark a shift in tone for the government, which has maintained for the better part of a year that the UK is better placed than other nations to cope with the global credit slump but now it seems that Brown is preparing voters for a deep and prolonged recession.

The downturn in sentiment has deteriorated exponentially over the past month and the subsequent increase in the unemployment rate has fuelled concerns that over 2 million will be out of work and claiming benefits by Christmas and that has caused a significant decline in retail sales.

Therefore, consumer spending is unlikely to be strong enough to boost growth over the coming months, while the overwhelming slump in home values and tighter lending restrictions means that the UK economy will be unable to spend its way out of a recession.

The Pound has subsequently declined against the majority of the majors and after breaking through the major support at 1.2200 versus the Euro, the UK currency appears poised to make further losses after recording a low of 1.1905 by the close of trading last night.

UK stocks also slumped for a second consecutive day, led by a drop in commodities and the dwindling sentiment surrounding the outlook for the economy may see the Pound consolidate under $1.5000 versus the Dollar as traders look for the security of safe haven assets.

The Euro is gathering in momentum against the Pound but the single currency made further losses versus the Dollar as European industrial production declined by the most in almost seven years in September.

Factory output in the 15 nations that make up the Euro-zone fell 2.4% from this stage in 2007 to record the biggest annual decline since February 2002 and there is little prospect for an improvement as the economy stumbles through the first recession since the Euro’s introduction in 1999.

As the economic outlook deteriorates, the European Central Bank have reduced interest rates by one percentage point already over the past two months and the prospect of a further reduction has been improved following the dramatic slump in oil prices that is feeding through to the broader economy.

Data Released 13th November

EU 09:00 ECB Monthly Bulletin Published

U.S 13:30 Initial Jobless Claims (w/e 7th Nov)
U.S 13:30 Trade Balance (September)
U.S 19:00 Federal Budget (October)

written by Adam Solomon

The negative sentiment surrounding the Pound is gathering momentum as the UK currency registered further declines against the Dollar yesterday and plunged to yet another record low versus the Euro after UK home sales slumped and added to recent evidence that the economy is falling deeper into a recession.

The Pound also declined against the Yen as an element of risk aversion crept back into the market and investors sought the security of lower yielding assets, including the Dollar, while UK fundamentals again painted a gloomy picture for the outlook for economic growth.

The report from the Royal Institution of Chartered Surveyors showed that property sales plunged to an average of 10.9 in the last quarter, the fewest amount since the series began in 1978.

The RICS index also showed that a much higher percentage of agents reporting falling prices exceeded those reporting gains, a ratio that has been negative since August 2007, while a separate gauge of the report indicated that UK retail sales plunged for the first time since 2005.

The Bank of England have slashed interest rates from 5.75% at the beginning of 2008 to just 3.0% in November but a cohesive effort to lower borrowing costs in October preceded the single biggest cut in rates since 1983, bringing the UK benchmark lending rate to lowest level since 1955.

The escalating financial crisis has led to heightened concerns that the UK economy will enter a deep and prolonged recession but the unprecedented injection of liquidity and a 2.0% drop in interest rates is designed to revive growth and spur lending.

The dramatic reduction has already prompted banks to significantly lower the libor rate, while lenders have bowed to pressure from the government to pass on the cut to their clients and boost the floundering UK mortgage market.

Even so, the general lack of mortgage finance remains a major stumbling block in the revival in the housing market as prices extended declines in all 12 of the major regions monitored by the Royal Institution of Chartered Surveyors.

Falling house prices and the rising jobless rate are encouraging consumers to rein in spending as retail sales fell an annual 2.2% in October to record the first decline since April 2005.

The Pound subsequently declined against the majority of the 16 most actively traded currencies and the UK currency continues to test the major support at 1.2200 versus the Euro and with very little appetite for Sterling above 1.2300 further declines are likely.

The focus this morning will fall on the Bank of England's quarterly inflation report and with producer and consumer prices receeding, the report is expected to reflect the overwhelming drop in oil prices in the three months through October.

In addition, UK stocks also dropped for the first time in three days in the aftermath of the reports as the FTSE dropped 3.6% on the session and the index has lost 34% in value this year alone and is poised for its worst year on record.

The Euro continued to make robust gains versus the Pound yesterday but the single currency struggled to consolidate on the short-term momentum versus the Dollar despite reports in Germany that investor confidence unexpectedly rose in November.

The ZEW Center for European Economic Research said that its index of investor and analyst expectations increased to minus 53.5 this month from minus 63 in October and investors had expected the reading to remain unchanged at close to the lowest level on record.

Nevertheless, investor sentiment has remained in negative territory for the 16th consecutive month in November, which suggests that the pessimistic view surrounding the outlook for the economy continues to outnumber those reporting optimism.

The European Central Bank have lowered interest rates by half a percentage point over the past month in an attempt to bring the economy back from a technical recession and ECB member Guy Quaden said yesterday that he expects further cuts over the coming months.
Data Released 12th November

U.K 09:30 Average Earnings (3 Mths to September)

U.K 09:30 Claimant Count Unemployment (October)

U.K 09:30 BoE Quarterly Inflation Report

EU 10:00 Industrial Production (September)

written by Adam Solomon

Against all the odds a second Currency Market News podcast has been released. This week:

Labels: currency, news, podcast

The Pound slumped to a fresh record low against the Euro yesterday and the UK currency also recorded sharp losses versus a basket of currencies, including the U.S Dollar, as an industry report confirmed that UK home sales dropped to the lowest level in at least thirty years.

According to the report from the Royal Institution of Chartered Surveyors, property sales plunged to an average of 10.9 home in the last quarter, the fewest amount since the series began in 1978.

The RICS index also showed that the percentage of agents reporting falling prices exceeded those reporting gains by 82 points, an indicator that has been negative since August 2007, while a separate gauge of the report indicated that UK retail sales plunged for the first time since 2005.

The Bank of England have slashed interest rates from 5.75% at the beginning of 2008 to just 3.0% in November but a cohesive effort to lower borrowing costs in October preceded the single biggest cut in rates since 1983, bringing the UK benchmark lending rate to lowest level since 1955.

The escalating financial crisis has led to heightened concerns that the UK economy will enter a deep and prolonged recession but the unprecedented injection of liquidity and a 2.0% drop in interest rates is designed to revive growth and spur lending.

The dramatic reduction has already prompted banks to significantly lower the libor rate, while lenders have bowed to pressure from the government to pass on the cut to their clients and boost the floundering UK mortgage market.

Even so, the general lack of mortgage finance remains a major stumbling block in the revival in the housing market as prices extended declines in all 12 of the major regions monitored by the Royal Institution of Chartered Surveyors.

Falling house prices and the rising jobless rate are encouraging consumers to rein in spending as retail sales fell an annual 2.2% in October to record the first decline since April 2005.

The Pound subsequently declined against the majority of the 16 most actively traded currencies and the UK currency continues to test the major support at 1.2200 versus the Euro and with very little appetite for Sterling above 1.2300 further declines are likely.
Data Released 11th November

U.S Veteran's Day Partial Market Holiday

U.K 09:30 DCLG House Prices (September)

U.K 09:30 BoE Quarterly Inflation Report

EU 10:00 Industrial Production (September)

written by Adam Solomon

Following on from last week, the Pound suffered its biggest weekly decline against the Euro since December 2004 after the much larger-than-forecast interest rate cut by the Bank of England increased concerns that the UK economy is heading for prolonged and deep recession.

The UK currency also posted a weekly drop versus the Dollar after policy makers, led by the governor, Mervyn King, reduced borrowing costs to 3.0% in an unprecedented move to bring interest rates to lowest level since 1955.

The deteriorating credit conditions and alarming weakness in UK fundamentals has led to speculation that growth in the UK economy will drop 1% in 2009 and investors are already expecting further interest rate cuts over the coming months amid suggestions that rates will reach 2.0%.

The global easing of monetary policy is just the latest initiative to stem the impact of the 15-month credit crisis as it inflicts definitive blows to economic growth and inflation but policy makers may be fighting a losing battle as banks struggle to pass on the reductions to households and companies.

However, HBOS Plc and three other banks that share a monopoly of the UK’s mortgage market finally slashed rates on Friday after government ministers urged them to pass on the cut in borrowing costs in an effort to revive the floundering UK property market.

The Royal Bank of Scotland Group Plc, Northern Rock Plc and the Nationwide Building Society also reduced their standard variable rates by 1.5% and it is no coincidence that these particular institutions relented to pressure considering all have agreed to sell stakes to the government.

Reports last week showed that UK service sector growth, which accounts for over two thirds of gross domestic product, fell deeper into negative territory last month, while industrial production and factory output had its longest streak of declines for almost thirty years.

Nevertheless, in the wake of the Central Bank’s 1.5% drop in UK interest rates, the FTSE 100 index advanced for the first time in three days led by an increase in British Airways Plc and Marks & Spencer Group Plc.

Despite some easing in financial market volatility, sentiment is likely to remain tentative over the coming week as risk aversion remains the dominate force in the market with investors focusing on the gloomy outlook for economic growth.

The Veteran’s Day holiday in the U.S on Tuesday may mean that trading gets off to a slow start this week, while investors will also be looking ahead to the weekend’s G-20 financial summit for further direction.

The Pound could struggle to stem the losses against the majors this week as Wednesday’s release of the Bank of England’s latest quarterly inflation report, which should reflect the dovish tone of last week’s policy statement and perhaps give an indication on how much lower rates could go.

Although the Euro has risen sharply against the Pound, the single currency could make further losses versus the Dollar on demand for the so called safe haven assets but with the ECB interest rate decision out of the way, the focus will shift back towards data releases.

The European Central Bank elected to lower interest rates by 50 basis points last week and in the accompanying statement, the chairman Jean-Claude Trichet, reiterated concerns that the Euro-zone economy is heading deeper into a recession.

The preliminary estimates for economic growth in the third quarter should confirm a technical recession with the economy forecast to contract by a further 0.2% and a plethora of ECB speakers are likely to echo the tone of comments at last week’s post meeting press conference.

Elsewhere, European stocks resumed their losses in the aftermath of the policy decision as the cut in rates failed to ease concerns that the economy and corporate earnings will deteriorate going into 2009.

The Dollar may have lost some of its appeal over the past week but the allure of the U.S currency is still strong in an environment of risk aversion where traders look to sell high yielding currencies in favour of low cost loans in Japan.

In terms of economic data, the Dollar also stood firm on Friday despite reports that the U.S unemployment rate rose to the highest level since 1994 as companies slashed payrolls and increased the prospect of the steepest economic decline in at least 30-years.

The rising jobless rate increased 6.5% in October from 6.1% the previous month, while employers cut 240,000 jobs, despite initial forecasts of a 180,000 decline, to register the biggest two-month slide since 2001.

Rising unemployment combined with other signs that the economy contracted last month has put pressure on the new U.S President elect Barack Obama to quickly name his economic team and spur congressional Democrats to announce a second fiscal stimulus package.

In the aftermath of Obama’s historic victory in the U.S Presidential election, U.S stocks and commodity markets declined, while the Dollar also came under some pressure amid suggestions that Democrats have previously allowed the U.S currency to decline in order to prop up the economy.

Data Released 10th November

U.K 09:30 Producer Price Index

- Input

written by Adam Solomon