Weekly US$ rates and comments - week commencing 5th May 2009

Last week was a quiet week for economic data or developments and the UK news headlines was instead dominated by events involving the potential swine-flu pandemic rather than the ongoing global recession. There have been some encouraging signs that sterling has now reached and returned from the bottom of its value on the currency markets. Prices have maintained recent improved levels despite a lack of positive market data to support any substantial upturn in the economy other than the sustained increase in manufacturing over the last 3 months. This week bares little to nothing more in terms of major economic data for sterling other than the Bank of England’s monthly decision on interest rates where the broad expectation will be for another hold at 0.5%.

  

The US$ sit at US$1.503 inter bank having suffered on the markets last week as a consequence of the increase in risk appetite and a poorer-than-expected result in Gross Domestic Product figures for the first quarter of 2009. News regarding the bankruptcy of the giant US car manufacturers Chrysler certainly contributed to the weekly losses for the US$. President Obama’s decision earlier in the year not to bail-out the chronically troubled car manufacturing industry in the US will now be re-visited as the honey-moon period of his term comes to an end and with it potentially the sense of hope and confidence that his arrival in office had initially brought. This week we have The Fed Chairman’s congressional testimony, on Thursday we have the results of the US banks balance sheet audit [otherwise known as the stress tests] and at the end if the week we get the US non farm payroll figures [i.e. the unemployment figures]. So it all looks set o be an interesting week for the US$.