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Midday Update 17/02/2009

Posted by chrisdshaw in Uncategorized.
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Following a lacklustre day yesterday the currency markets reignited overnight with concerns about the EUR leading to a decline in EURUSD, enough to trigger stops below the 1.2700 level, to a 10 week low. This followed an announcement by Moody’s Investors Service that it may downgrade a number of European banks with Eastern European exposure. EURUSD is now trading just above the 1.2600 level, with the next target of 1.2550, the December low. On the plus side the ZEW in Germany, which measures investor sentiment showed a February reading of -5.8, better than the market expectation of -25.0 and better than the dismal -31.0 in January. The survey said that the improved reading was due to the expectations of a positive effect of the monetary and fiscal stimulus packages. However, apart from an initial spike after the release, EURUSD unaffected.  In Japan, the Finance Minister has announced he would resign, following controversy over his behaviour at a news conference in at the G7 where he looked drunk. The UK CPI declined less than forecast to 3% y/y compared with the market expectation of 2.7% and  december figure of 3.1%. Sterling gained about 100pips against the dollar to the 1.4250 level. An ONS official said that the fall in prices less than expected due to unusually heavy discounting in December.

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