Forex Daily

Although we should not get too excited about the better than expected rate of spending for the month of November in the US a spending rate increase of 1.1 % has to be good news.

It seems that personal income has also increased too. It is thought though that the upsurge in retail spend was around the thanksgiving period and that the recent drop in confidence has yet to filter through.

Bank of England policy makers all voted to cut the interest rates in the UK to 5.5% There are also thoughts that a further rate cut may well be needed if the economy continues to slow. We expect this may happen around January 2008.

In an attempt to save the economy the Bank of England looks set in offering lenders £11.4bn in funds.
This will of course lessen the credit crunch which has turned global.The focus is to help lending between commercial banks and retail which has risen in the last few weeks.

This follows a similar tact from the US federal reserve who through auction made 20 billion US dollars available.

Credit problems cannot be solved overnight but these measures may well help. Despite interest rates being cut in the UK and US lending rates have remained high.

The IATA (International Air Transport Association) announced what airlines will make lower profits in 2008 than they did in 2007.

The body which is a representative of 260 airlines kept the 5.6 billion usd 2007 forecast, this it considers will be at the top of the profits and traffic since the year 2000.

The forecast for 2008 was 5 billion usd compared to the previously thought 7.8 billion.

Sterling is fighting its way back following losses with the US dollar when the Bank of England cut interest rates. The interest rates in the UK were lowered from 5.75 percent to 5.5 percent.

The rate cut was the first seen in more than two years and was not anticipated by many financial experts who believed that the interest rates would remain fixed.

A growth of 0.2% for the month of October has been seen.The previous month saw a decrease of 0.1% according to research.

The UK has recently seen a succession of declines so the October growth of 0.2% with prices of stock and productivity being great performers it’s welcome news. Yield spread has not been so rewarding contributing only negatives.

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Although the present market is still feeling the effects of the credit tightening which has put currencies such as the dollar under more pressure the Yen has reaped the benefits.

As a funding currency the Yen in carry trades is picking up from the continued high risk aversion status. The Yen continues to hold up against other currencies such as the euro, dollar and Aussie which are known to be high yielding.

Debts amounting to over 105 billion will have the credit rating lowered which comes after the subprime financial mortgage crisis.