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Former Chancellor of the Exchequer calls for lower U.K. interest rates
Former Chancellor of the Exchequer Nigel Lawson (Lord Lawson), speaking at a House of Lords economic seminar, has called for lower U.K. interest rates. He feels interest rates, not Keynesian-style spending policies or major tax cuts, are the ideal tool to soften the coming economic slump. Lord Lawson expects the recession to be at least as bad as the early 90s if not worse saying “There is lots of bad news still to come and lots of bad debts yet to be revealed. I would be astonished if this is not at least as bad as the early 1990s. Infact I think it will be worse than that-and longer lasting.” The solution he added is “monetary policy and very low interest rates which should be globally concerted.”
Meanwhile in the markets, EUR/USD and cable have both given up a fair amount of the ground made overnight, presently down at 1.3070 and 1.6490 respectively. It is the probability of ECB and BOE rate cuts next week which is helping undermine the euro and pound at present.
German Oct unemployment at 7.5%
German October unemployment rate has come in at 7.5%, with the number of unemployed falling by 26k. This is better than the consensus forecasts, which had called for the unemployment rate to hold steady at 7.6% and for the number of unemployed to fall by 10k.
Nationwide: U.K. house prices fall most since 1991
As expected the latest Nationwide house price survey doesn’t make very palatable reading. The average cost of a home fell 14.6% in October from a year ago to 158,872, the largest decline since the survey started in 1991. There is no end in sight to the downward spiral in U.K. house prices, and things look likely to get even worse in the coming months. Meanwhile cable has garnered decent support overnight from the return of risk appetite, although presently at 1.6570 it is off a full cent from its best level.
JPY appreciably weaker across the board
The JPY and to a slightly lesser extent the USD have seen across the board weakness overnight. Risk aversion is seemingly evaporating and risk appetite returning, as evidenced by surging Asian stockmarkets and improving commodity prices. USD/JPY is presently up at 98.60 having closed out in North America down around 97.40, while EUR/JPY is up at 130.20 from around 126.25. For today, technical resistances for USD/JPY lie up at 99.10 and then 99.70, while 100.00 is expected to be a fairly formidible psychological topside barrier.
EUR/JPY to the moon in Asia
The dollar and yen bubbles continue to deflate as global financial markets extend their recoveries. Commodities, currencies and equities are all on firmer footing after a fresh round of rate cuts from China, the US , Taiwan and Norway today and another round expected from the BOJ on Friday and the ECB and BOE next week.
The despair that gripped the markets in recent weeks and prompted panic buying of dollars and yen is lifting as equities rebound and drag other asset classes along for the ride. Now the trades taken in anticipation of further asset carnage are having to be scrapped in double quick time.
Asian shares are on fire and regional currencies are recovering strongly after the Fed swap lines extended to South Korea and Singapore late Wednesday afternoon.
EUR/JPY is close to 130.00 as we write, up from 113.60 on Monday! EUR/USD is at 1.3160. Next reesistance is 1.3260, the Oct 10 spike low.
Dow Jones misquote cost DJIA 400 points
I guess its poetic justice that it was the Dow Jones newswire which mangled the Jeff Immelt quote which scuttled a late 3% stock rally.
Blancheflower: Told ya so!
Give props to MPC member Blanchflower. He consistently called for lower rates while the rest of the MPC focused on the commodities bubble. Now he fears the BOE may have done too little, too late.
Nikkei says Japanese bond market has rate cut 80% priced in
After China, Norway and the US cut rates today, the Nikkei reports that Japanese bond markets has a 25 bp cut 80% priced in.
Anybody see my 250 Dow points?
With 8 minutes to go, the Dow was up better than 250 points. Now, down 50. GE says its revenue could fall 10-15% next year, which took the air out of the balloon. This is just crazy…
USD/JPY, EUR/JPY grinding through resistance as stocks fly
US equities are extending their recovery, up 3% as we head for the close. Steadier emerging markets, firmer commodities and a slide in the dollar are all reinforcing one another, the reverse of the scenario that played out as recently as Monday.
USD/JPY chewed through heavy offers in the 97.90/00 area, reaching 98.01 so far while EUR/JPY reached 126.77. Next resistance is 127.35, the high posted early in Asia overnight.
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