Daily currency update courtesy of Halo financial

(Catharine Higginson) #1

The big news over the weekend was the agreement reached in Basel, Switzerland which requires banks to hold 4.5% of assets in common stock, from the current 2% requirement. A further 2.5% will be introduced as an additional buffer, which if it is not met, will allow regulators to stop the banks from paying out dividends and bonuses. Basel III has been positively perceived by the markets as it strengthens global capital standards and improves stability in the banking sector. Another positive was that Basel III has allowed 6-years which should be plenty of time for the banks to raise additional capital.

Six Chinese economic releases for August hit the market in the early hours of this morning. This data was stronger than expected and has pushed the stock markets higher on increased risk appetite. Higher risk appetite has buoyed the Euro, Aussie, Kiwi and Canadian dollars at the expense of the Japanese Yen and US dollar this morning. We are now at crucial support levels (floors) for GBPEUR around €1.20, GBPAUD A$1.64, GBPNZD NZ$2.10 and GBPCAD at C$1.58.

In the Wall Street Journal US Treasury Secretary Timothy Geithner expressed his disapproval in China’s efforts to allow the Chinese Yuan to strengthen. Geithner said “China has done very, very little on their exchange rate”. He urged the Chinese to allow their currency to move up over a sustained period of time.

The Greek Prime Minister has ruled out restructuring debt, saying it would be a “catastrophic” for the country’s credibility and economy. He said that if Greece halted debt repayments it would be a tragedy as the banking system would probably collapse and Greek families would lose their properties.

The Euro is getting a real boost this morning from Basel III, Chinese data and now from the EU Commission who have just increased their 2010 GDP growth forecasts for the Eurozone from +0.9% to +1.7% and for German growth from +1.2% to +3.4%!

The Catholic Church in Australia has banned pop, rock or football club songs at funerals. The Archbishop said funerals are a final sacred farewell not a celebration of the deceased life. 10 of the most popular unusual songs to be banned include Queen's "Another One Bites the Dust," AC/DC's "Highway to Hell, "Always Look on the Bright Side of Life" by Monty Python, and "Ding Dong the Witch is Dead" from "The Wizard of Oz."