MORNING BRIEFING: The Pound Sterling continued its descent into hell, below $ 1.6000

[RTFX-Trading]

MORNING BRIEFING: The Pound Sterling continued its descent into hell, below $ 1.6000

What’s new:
G20: Geithner said that the dollar will retain its leading role
G20: Merkel: market regulation is a priority
G20: China is open to global rebalancing
G20: France wants to talk about exchange rates
Lagarde: France is exiting the recession, no crisis
France: Unemployment rises slightly in August
Central Banks: reduction of massive injections of U.S. dollars
Denmark: The central bank lowered its key rate by 10 basis points to 1.25%
United States: unexpected drop in weekly jobless claims to 530,000
Germany IFO: the pace of recovery raises doubts

Today:


Rates in Asia and Indices:
EURUSD: 1.4700 - 1.4614
USDCHF: 1.0321 - 1.0269
EURUSD: 1.6067 - 1.5916
EURJPY: 133.89 - 132.52
USDJPY: 91.36 - 90.56
DowJones: 9'707 -0.42%
NASDAQ: 2'107 -1.12%
S & P 500: 1,050 -0.95%
Nikkei: -2.39% 10'291
Shanghai: 2,829 -0.84%
GOLD: $ 997.15
Oil: $ 66.57
 
Comments:
The Heads of State and Government of the G20 are coordinating their actions in the economic and financial sector. The U.S. president, Barack Obama, emphasizes the need to start balancing the global economy, which puts pressure on China. EU leaders want to discuss the bonuses in finance and reform the rules governing bank capital. Climate, trade tensions and projects of international financial reforms are on the agenda today.

Major central banks intend to reduce the massive injections of U.S. dollars into their banking systems in view of stabilizing financial markets. The Fed will start to reduce its auction mechanism for short-term liquidity in early 2010. The ECB, BoE and SNB said they wanted to limit the measures taken to provide liquidity in dollars. Central banks therefore indicate a gradual withdrawal of extraordinary measures taken since the beginning of the global crisis.

The pound sterling is in freefall since the declaration of the Governor of the Bank of England, King yesterday morning. This declaration “decline of the pound is good for the UK economy” is regarded as a verbal intervention. The Pound Sterling against the Dollar (GBPUSD), Pound Sterling against the Yen (GBPJPY) and Pound Sterling against the Swiss Franc (GBPCHF) - all three are falling about 500 points since the announcement. A series of stop-loss sellers below 1.6000 were executed this morning in Asia, GBPUSD, after touching 1.5925, rebounded to 1.6010.

Good day.

Nicolas Longchamp
RTFX Ltd
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