- BOE’s Sentance sees promising signs global recession ending, but UK faces significant challenges to a strong recovery
- ECB’s Noyer: IMF SDRs cannot replace currencies for reserve purposes. Expresses “cautious optimism” on global economy
- ECB’s Orphanides: Central banks dealing with an extreme episode of financial instability and a truly globalised economic downturn
- ECB bulletin: Non standard measures will take time to feed through to economy in full. Editorial resembles comments made by Trichet post ECB meet last week
- UK May inflation expectations for year ahead rise to 2.4% vs 2.1% in Feb -BOE
- UK mortgage approvals rise 16% m/m in April -CML
- EU, US to take WTO action vs China on raw materials export quotas/duties
The USD having lost ground in Asian overnight ran into a little strength early, with EUR/USD slipping below 1.40 and cable below 1.6400. Comment from ECB’s Noyer, that IMF SDRs cannot replace currencies for reserve purposes, helped alleviate fears BRICs set to aggressively diversify out of USD.
The comment from ECB’s Orphanides (see above) also served to dent risk appetite just a little, also lending the USD some support.
It looked like being a relatively sedate session by European standards and then all of a sudden the USD came under heavy across the board pressure, EUR/USD and cable soaring to session highs at 1.4060 and 1.6491 in double-quick time. The main catalyst for the move was a Bloomberg report of comments made by Nouriel Roubini at a conference in Athens.
The world renowned economics professor from New York University said “We may see complimentary reserve currencies.” While it’s “not going to happen overnight” and currencies won’t provide competition “initially” the development “will diminish the role of the dollar over time.”
Both pairings have settled back, to 1.4015 and 1.6455 respectively. Market continues choppy, lacking any clearly-defined direction at the present time.
