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Market Review - 02/02/2009 22:13 GMT
British pound tumbles as Moody downgrades Barclays’ rating
The British pound declined sharply from 1.4545 to 1.4052 on Monday as Moody’s Investors Service cut the long-term debt rating of Barclays Plc. to Aa3, its fourth-highest grade, from Aa1. Investors sold cable actively on worries over the health of Britain's financial sector and economic outlook. Euro rallied against the sterling from 0.8810 to 0.9081. However, sterling staged a strong recovery to 1.4298 in New York session on short-covering.
The FTSEurofirst 300 index of top European shares ended down 2.4% at 777.28 points. British bank Barclays fell by 12.3% after a Moody's downgrade. French bank BNP Paribas also slid 9.4%, hit by its statement that a revised deal to buy assets of stricken Belgian-Dutch financial group Fortis would not boost its core capital ratio.
The greenback fell against the Japanese yen from 90.06 to 88.80 on active cross buying in jpy especially versus the single currency and sterling in European morning before rebounding to 89.99 after the a better-than-expected reading on U.S. manufacturing data. Eur/jpy weakened to 113.09 and then rebounded strongly to 116.00 in U.S. session. Sterling dropped against the Japanese unit from 130.32 to 125.33 before recovering to 128.60.
The single currency dropped initially to 1.2706 as eurozone government bond prices rose on worries of a deepening global recession and then rebounded to 1.2900 on active cross unwinding in euro especially versus the Japanese yen and sterling after the release better-than-expected U.S. ISM manufacturing data.
On the data front, U.S. consumers cut spending by 1.0% in December, a sixth straight month drops, as their incomes shrank by 0.2%. U.S. construction spending also fell by 1.4% in December. However, the Institute for Supply Management manufacturing index rose to 35.6 from a nearly three-decade low of 32.9 in December.
Earlier in the day, New Zealand’s dollar weakened to as low as 0.4961 versus the U.S. currency as the Treasury said the economy will remain in recession until at least the end of March. The Reserve Bank lowered its official cash rate by 1.50% to a record 3.5% last week.
Crude oil prices fell below $41 a barrel as a deepening U.S. recession curbed demand in the world's top energy user. Gold retreated from last Friday’s high of 929.70 to 901.90 as investors took profits after a 15% gain in January on concerns about the economy and turbulence in equity markets.
Tuesday will see the release of German retail sales, U.K. PMI construction, eurozone PPI and U.S. pending home sales. The Reserve Bank of Australia is widely expected to interest rate by 100 basis points to 3.25% on Tuesday from 4.25%.
British pound tumbles as Moody downgrades Barclays’ rating
The British pound declined sharply from 1.4545 to 1.4052 on Monday as Moody’s Investors Service cut the long-term debt rating of Barclays Plc. to Aa3, its fourth-highest grade, from Aa1. Investors sold cable actively on worries over the health of Britain's financial sector and economic outlook. Euro rallied against the sterling from 0.8810 to 0.9081. However, sterling staged a strong recovery to 1.4298 in New York session on short-covering.
The FTSEurofirst 300 index of top European shares ended down 2.4% at 777.28 points. British bank Barclays fell by 12.3% after a Moody's downgrade. French bank BNP Paribas also slid 9.4%, hit by its statement that a revised deal to buy assets of stricken Belgian-Dutch financial group Fortis would not boost its core capital ratio.
The greenback fell against the Japanese yen from 90.06 to 88.80 on active cross buying in jpy especially versus the single currency and sterling in European morning before rebounding to 89.99 after the a better-than-expected reading on U.S. manufacturing data. Eur/jpy weakened to 113.09 and then rebounded strongly to 116.00 in U.S. session. Sterling dropped against the Japanese unit from 130.32 to 125.33 before recovering to 128.60.
The single currency dropped initially to 1.2706 as eurozone government bond prices rose on worries of a deepening global recession and then rebounded to 1.2900 on active cross unwinding in euro especially versus the Japanese yen and sterling after the release better-than-expected U.S. ISM manufacturing data.
On the data front, U.S. consumers cut spending by 1.0% in December, a sixth straight month drops, as their incomes shrank by 0.2%. U.S. construction spending also fell by 1.4% in December. However, the Institute for Supply Management manufacturing index rose to 35.6 from a nearly three-decade low of 32.9 in December.
Earlier in the day, New Zealand’s dollar weakened to as low as 0.4961 versus the U.S. currency as the Treasury said the economy will remain in recession until at least the end of March. The Reserve Bank lowered its official cash rate by 1.50% to a record 3.5% last week.
Crude oil prices fell below $41 a barrel as a deepening U.S. recession curbed demand in the world's top energy user. Gold retreated from last Friday’s high of 929.70 to 901.90 as investors took profits after a 15% gain in January on concerns about the economy and turbulence in equity markets.
Tuesday will see the release of German retail sales, U.K. PMI construction, eurozone PPI and U.S. pending home sales. The Reserve Bank of Australia is widely expected to interest rate by 100 basis points to 3.25% on Tuesday from 4.25%.
