finAnciAl voice
www.abplgroup.com - Asian Voice 1st June 2013
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Foreign Exchange Paresh Davdra is the Dealing Director of RationalFX, Currency Specialists.
US planning to scale back on QE
Weekly Currencies As of Tuesday 21st May 2013 @ 4.30pm GBP - INR = 84.29
The US dollar, once again, came into focus last week following Ben Bernanke’s speech in Congress on Wednesday 22nd May. In prepared testimony, Bernanke had stated that withdrawing the Fed’s quantitative easing programme (QE) could threaten the nation’s economic recovery. However, when questioned on the topic in the press conference, Bernanke confirmed that the central bank will start to discuss scaling back its QE programme in the next few meetings; as long as the job market continues to see improvement. Later on that day, this notion
Ben Bernanke
was reconfirmed as the Federal Open Market Committee minutes revealed that several of the monetary policy members felt that QE should begin unwinding as early as June. The US dollar drew support following these comments, as a reduction of QE would give reason for the US dollar to strengthen. The UK came under the spotlight last week, with the pound on the back foot following a series or weaker economic data to paint a gloomy picture for the UK. Inflation fell to its lowest in a year and sales in the retail sector fell by 1.3% in March. The latest BoE minutes meeting revealed that the BoE votes were unchanged from last month with regards to expanding the current QE program with only three out of the nine members voting to increase the program. Whilst in the short term, the likelihood of further QE for the UK may not be in the cards; the market will be looking into what may happen later on in the year, especially when Mark Carney takes over from Mervyn King as the BoE Governor. The IMF gave their verdict
USD - INR = 56.01 EUR - INR = 72.00 GBP - USD = 1.50 GBP - EUR = 1.17 EUR - USD = 1.29 GBP - AED = 5.52 GBP - CAD = 1.56 GBP - NZD = 1.86 on the UK economy on Wednesday calling upon the government to bring in new measures to support growth in the economy as well as calling on the government to ease the pace of its austerity programme. The euro remained relatively well supported after consumer confidence and business climate figures came in better than expected from Germany. The euro’s moves continue to be dictated by fundamentals especially with speculation still surrounding talk of further stimulus being bought in by the European
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Central Bank. China’s manufacturing contracted in May, adding to the recent string of poor data that has come out the nation. The impact in the markets was pretty emphatic with stock markets across the globe taking big losses, notably the Japanese Nikkei falling 7.3% in last night’s trade. As a result commodity linked currencies, such as the Australian dollar, also took big losses, notably with the South African rand falling to four years lows against the US dollar and the pound.
GBP - AUD = 1.56 GBP - ZAR = 14.71 GBP - HUF = 335.35
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