Weekly US$ rates and comments - week commencing 5th November 2007

 

Sterling did okay this week. Various members of the Bank of England made comments that the UK was suffering a slowdown rather than anything worse [at this time] and this has led the market to believe that any UK interest rate cuts are unlikely until next year. This has lent some support to sterling which has gained against nearly every currency apart from the all conquering Canadian $ [C$1.954/£1 inter bank]. Although the UK housing market is less robust than it was, house prices "apparently" increased in September. I am slightly sceptical about these figures but it does indicate that we are not in the same dire straights that the US finds itself in.

 

The US$ has lost a lot of ground this week hitting an inter bank rate of US$2.089/£1. Economic data has been poor with consumer confidence beginning to slip. The Fed cut interest rates by 0.25% but did state that inflation continues to be of concern. As such further US interest rate cuts are considered unlikely short term. We are also hearing rumours about further possible and significant write offs relating to housing loans which is making the market nervous. Listed US financial institutions have seen significant reductions in their values. Until we see interest rate cuts elsewhere the US$ is unlikely to make gains short term.