The safe haven US Dollar and Japanese Yen have strengthened as the markets grow increasingly risk averse as signs of global economic weakness increase. The German Finance minister Wolfgang Schaeuble rejected plans for another debt restructuring for Greece and the latest retail sales figures out of Spain showed a decline of 11% in September from the previous year.
Spain is set to publish a number of important economic data reports that will show the extent of the damage inflicted to the Eurozone’s fourth biggest economy. Tomorrow sees the release of figures for the nation’s public finances, consumer prices and GDP which is expected to show contraction for a fifth quarter.
“What we see now is that the economy is worsening,” said Yannick Naud, a London-based portfolio manager at Glendevon King Ltd. “We have seen a sharp reduction of the 10-year bond yield which is not warranted by the economic situation, it has only occurred because of the threat of intervention by the European Central Bank.”
The situation in Spain has not been helped by the figures released by the nation’s government. Their figures have been wide off the mark when compared to independent statistics companies for example; economists are predicting Spain’s economy to shrink by 1.4% next year compared to 0.5% claimed by the government.
All of tomorrows data is expected to paint a grim picture for the Spanish economy and will almost certainly see the Euro weaken further, by how much will depend on how bad the data is, no-one is expecting any improvements.
“Spain is going to miss on its deficit target this year making next year’s goal very unlikely to be achieved,” Justin Knight, a European rate strategist. “Spain is eating into its cash reserves and is probably not going to be able to continue to fund itself in 2013 as it has done this year.”
The Euro weakened 0.2 percent to $1.2907 as of 9:43 a.m. London time. It reached $1.2883 on Oct. 26th, the lowest level since Oct. 11th. The 17-nation common currency fell 0.3 percent to 102.78 yen, after sliding as low as 102.52, its lowest since Oct. 16th. Japan’s currency was little changed at 79.63 per dollar.
The single currency has dropped by 1.6% in the past six months making it the second worst performing currency after the Swiss Franc. The Yen has gained by 2.2% whilst the Dollar saw an increase of 1.3%.
The Pound to Euro exchange rate is currently trading at 1.2438
The Pound to US Dollar exchange rate is currently trading at 1.6059
The Pound to Australian Dollar exchange rate is currently trading at 1.5510
The Pound to New Zealand Dollar exchange rate is currently trading at 1.9574
The Pound to Canadian Dollar exchange rate is currently trading at 1.6047
The Pound to Japanese Yen exchange rate is currently trading at 127.7500
The Euro to US Dollar exchange rate is currently trading at 1.2904
The Euro to Pound exchange rate is currently trading at 0.8036
The Euro to Australian Dollar exchange rate is currently trading at 1.2462
The Euro to New Zealand Dollar exchange rate is currently trading at 1.5729
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