Weekly US$ Rates and Comments - Week Commencing 27th August 2007

Sterling had a better week. The markets have regained some equilibrium following the Feds move to reduce their lending rate to financial institutions. Also the ECB and the Fed continue to make available liquidity as and when required and in whatever size required. Any economic data released recently seems to have ignored. However, sterling will continue to be under pressure while the liquidity crisis continues and safe haven such as US treasury bills are preferred.

 

The US$ sits at US$2.003/£1 inter bank and has lost a bit of ground in the last week. Even though US treasury bonds are considered as safe haven assets the US economy still has some major problems so any short term and significant improvement in the US$ is unlikely.