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By Myles Birkett

The FED Chairman Ben Bernanke announced that he believes the $600 billion Quantitative Easing programme, that is in full swing currently, may not be enough to stimulate the US economy if bad data keeps being released, especially with regards to their recent high levels of unemployment. November showed unemployment at 9.8%, which could take 5 years to return to a normal level (Bernanke’s ideal level) of 5 or 6%. In a rare television interview, Bernanke explained that their current position means that they are able to be reactive dependant on how the economy is responding, raising or lowering their QE programme month on month to try and kick start the growth of the US economy.

Bernanke has hinted whilst an extension to the QE programme may be possible it is also possible that if the economy does start to recover quicker than expected they could contract QE before the full $600 billion is brought. This leaves plenty for the rumour mill and further uncertainty around a subject most thought had subsided so if you have a dollar requirement please put your details below or on the contact us page to discuss what you need further.

By Myles Birkett

Yesterday saw the Bank of England confirm the interest rate would stay at (drum roll please) 0.5%, as expected. Many expected a hint towards QE*, but what we actually saw was the aausterity measure being quelled in the medium term. I don’t believe that QE has disappeared completely as it has been such a high topic of conversation in the past few months and if we are to see it return it may be early next year. With GBPUSD hitting rates not seen since January this year and QE not being introduced in the UK I expect levels to be heading towards the 1.70 rather than retracing its steps.

If you have a requirement on the dollar whether it be buying or selling please put your contact details below and I will contact you to discuss your requirement.

*Quantitative Easing

By Myles Birkett

You may or may not be aware that the American economy has been stumbling as of late, and there have been plenty of rumours as to how the Federal Reserve will help to stimulate it. Quantitative Easing was the rumour and it is now reality with €75 billion of asset purchases (such as bonds) being brought for the next 8 months. The FED will pump $600 billion in total, a figure not expected by the markets, into the US economy as lowering interest rate just simply isn’t an option. The markets expected $500 billion so with the extra $100 billion we’ve seen GBP/USD hit 1.61 and show no signs of letting up.  Historically QE in the US has been detrimental to the dollar and I believe it will have this effect again until QE is retracted.

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By Myles Birkett

The last couple of days has seen GBP/USD reach above the 1.60 mark and is showing no sign of a let up. As discussed briefly in my post yesterday, there is an argument that everybody is expecting the Democrats to lose seats today and which case this may be priced in to the market. This stems from online opinion poles that showed up to 90% of Americans believe the Republicans will regain seats, so with solidarity as high as this, Dollar strength might be on the cards. In my opinion anything out of the ordinary will be turbulent for the cable, keep your eyes firmly locked on the market if you do have a requirement please give me your details and I will contact you.

By Myles Birkett

Tommorow sees the US’ mid-term election, the expectations are that the republicans may regain control of the house. Some online market prediction polls have shown up to 90% believe Republicans will regain control. If we see a result as high as this, then I believe the solidarity shown amongst voters will boost the US dollar, at least for the short term. Last week the US economy showed it had annually grown by 2% from July-September, this positivity was short lived as the FED suggested that QE2 (Quantitative Easing – Americas Austerity Measures) will be introduced soon. This will see government bonds purchased and injected into the economy as fresh money, an effort to kick start their economy. Even with the market expecting QE2, I can only see it having a negative effect on the dollar. This backed with high unemployment and negative housing data sets quite a bleak winter for the dollar.

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