The Pound rallies above $1.8300 versus the Dollar after the Fed inject $700 billion in liquidity to avert a financial meltdown
Good Morning,
Following on from last week, the Pound rallied for a third day against the Dollar, rising above 1.8300 by the close of trading on Friday following reports that the Lloyds TSB Group agreed to buy HBOS Plc for an estimated £10.4 Billion after shares in the provider lost almost half its market value in what was a turbulent and historic week for financial markets.
The fourth biggest U.S investment bank Lehman Brothers Plc filed for bankruptcy as the 158 year old bank succumbed the global financial crisis while concerns over the fate of AIG Inc, the largest U.S insurer, prompted the Federal Reserve to inject up to $700 Billion into the market in order to avert a financial meltdown.
The Bush administration took the unprecedented step of intruding into markets and increasing the national debt by 6.6% to an astronomical $11.315 trillion and speculation persists that officials may also provide an additional $400 billion of guarantees for money market funds.
So then, are we to believe that when ‘Capitalism fails, the state provides?
The Treasury Secretary Henry Paulson had previously backed the bailout of the struggling U.S companies Fannie Mae and Freddie Mac and following the failure of Lehman Brothers earlier in the week, Paulson and the Fed chairman, Ben Bernanke, devised a rescue plan that sent stocks rocketing and the Dollar plunging.
The plan will boost borrowing by as much as $1 trillion according to reports from Barclays Plc but the government’s seizure of American International Group Inc and the following intervention on Friday combined with the ban on short-selling saw global stocks rally as the FTSE 100 Index enjoyed the biggest rise since January.
The Pound also enjoyed a sharp intraday move against the Dollar but the UK currency failed to gather momentum versus the Euro after an industry report showed that house prices declined for a fourth straight month in September, adding to recent evidence that the UK economy has entered a recession.
The average asking price for a home plummeted a further 1% from the previous month while prices slumped 3.3% from this stage in 2007, which may prompt the Chancellor Alistair Darling to address the deteriorating housing market conditions and pledge to tackle the failings at the root of the problem.
The Confederation of British Industry has already said that the UK economy entered a recession in July as growth stalled in the second quarter, bringing to an end the longest period of uninterrupted economic expansion in more than a century.
The release of economic data has paled in significance to the recent turmoil engulfing financial markets but the latest report from the CBI is expected t highlight further downside risks to growth while the Pound may succumb to speculation that the Bank of England will need to cut interest rates and provide some relief to the housing sector.
The Dollar’s three month rally against the majors has been derailed by the government’s plans to end the rout in financial markets as investors weigh the costs of the rescue while the temporary ban on short selling will provide some much needed stability to the market and encourage investors to seek high yielding assets back by low cost loans from Japan.
The U.S currency struggled to stem the flow of losses against 14 out of the 16 most actively traded currencies as the government’s intervention to cool the extreme volatility sweeping through markets coincided with Morgan Stanley’s share price dropping 44% to record the biggest one decline in history.
The daily fundamentals are largely being ignored at the moment but the Dollar may come under additional selling pressure as U.S durable goods orders decline in August with the previous months rebound in forecast being reversed while the full details of the government’s recue should be published this afternoon.
Data Released 22nd September
U.K 00:01 Rightmove House Prices (September)
Following on from last week, the Pound rallied for a third day against the Dollar, rising above 1.8300 by the close of trading on Friday following reports that the Lloyds TSB Group agreed to buy HBOS Plc for an estimated £10.4 Billion after shares in the provider lost almost half its market value in what was a turbulent and historic week for financial markets.
The fourth biggest U.S investment bank Lehman Brothers Plc filed for bankruptcy as the 158 year old bank succumbed the global financial crisis while concerns over the fate of AIG Inc, the largest U.S insurer, prompted the Federal Reserve to inject up to $700 Billion into the market in order to avert a financial meltdown.
The Bush administration took the unprecedented step of intruding into markets and increasing the national debt by 6.6% to an astronomical $11.315 trillion and speculation persists that officials may also provide an additional $400 billion of guarantees for money market funds.
So then, are we to believe that when ‘Capitalism fails, the state provides?
The Treasury Secretary Henry Paulson had previously backed the bailout of the struggling U.S companies Fannie Mae and Freddie Mac and following the failure of Lehman Brothers earlier in the week, Paulson and the Fed chairman, Ben Bernanke, devised a rescue plan that sent stocks rocketing and the Dollar plunging.
The plan will boost borrowing by as much as $1 trillion according to reports from Barclays Plc but the government’s seizure of American International Group Inc and the following intervention on Friday combined with the ban on short-selling saw global stocks rally as the FTSE 100 Index enjoyed the biggest rise since January.
The Pound also enjoyed a sharp intraday move against the Dollar but the UK currency failed to gather momentum versus the Euro after an industry report showed that house prices declined for a fourth straight month in September, adding to recent evidence that the UK economy has entered a recession.
The average asking price for a home plummeted a further 1% from the previous month while prices slumped 3.3% from this stage in 2007, which may prompt the Chancellor Alistair Darling to address the deteriorating housing market conditions and pledge to tackle the failings at the root of the problem.
The Confederation of British Industry has already said that the UK economy entered a recession in July as growth stalled in the second quarter, bringing to an end the longest period of uninterrupted economic expansion in more than a century.
The release of economic data has paled in significance to the recent turmoil engulfing financial markets but the latest report from the CBI is expected t highlight further downside risks to growth while the Pound may succumb to speculation that the Bank of England will need to cut interest rates and provide some relief to the housing sector.
The Dollar’s three month rally against the majors has been derailed by the government’s plans to end the rout in financial markets as investors weigh the costs of the rescue while the temporary ban on short selling will provide some much needed stability to the market and encourage investors to seek high yielding assets back by low cost loans from Japan.
The U.S currency struggled to stem the flow of losses against 14 out of the 16 most actively traded currencies as the government’s intervention to cool the extreme volatility sweeping through markets coincided with Morgan Stanley’s share price dropping 44% to record the biggest one decline in history.
The daily fundamentals are largely being ignored at the moment but the Dollar may come under additional selling pressure as U.S durable goods orders decline in August with the previous months rebound in forecast being reversed while the full details of the government’s recue should be published this afternoon.
Data Released 22nd September
U.K 00:01 Rightmove House Prices (September)
written by Adam Solomon
Posted at: 10:11
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