Currency markets were rocked by twin threats from either side of the Atlantic yesterday after Standard and Poors put a shot across the bows of the US by putting their US sovereign debt outlook on negative watch for the first time since 1941, giving the US government until 2013 to implement measures to start bringing the budget under control. This could well be the catalyst needed to concentrate the minds of complacent US politicians into restoring … Read more »

The US appears to be coming late to join the austerity party if one is to believe President Obama’s call for $4trn of cuts in 12 years. However when the debt ceiling is over three times that, one has to wonder if that will be enough to keep the US dollar from falling further as the US dollar index heads towards its 2009 lows at 74.17.  Yesterday’s March retail sales figures seem to underscore the fact … Read more »

Significant risk aversion saw the Swiss franc and yen regain some of the ground lost in the past few days on the cutting of global growth forecasts by the IMF of the US and UK economies and continued uncertainty about the nuclear situation in Japan. Yesterday’s surprise fall in the UK inflation rate for March, coming on the back of some poor retail sales numbers sent the pound tumbling, as the likelihood of a near term … Read more »

While a US government shutdown was averted at the eleventh hour last week the fact that it could have happened at all continues to undermine investor sentiment towards the beleaguered US dollar as it hit its lowest levels since the end of 2009 against a basket of currencies. With one crisis seemingly put to one side another confrontation looms in the coming weeks between Democrats and Republicans with respect to the raising of the debt ceiling, … Read more »

Last nights Fed minutes indicate that debates had already begun about the need for further stimulus measures for the US economy when the current round of bond purchases ends in June, even before this week’s little spats between various Fed officials. Despite Bernanke’s comments earlier this week about inflationary pressures remaining anchored there remains a number of members who do not share this view, or are expressing doubts about it and even the Fed chairman himself … Read more »