In Brief
EU finance ministers are due to discuss increasing the size of the ECB bailout budget today.
The UK housing market enjoyed a modest recovery in December, according to Rightmove.
It’s a public holiday in the US making it a quiet day for the dollar.
In Depth
EU
Good morning! The GBPEUR exchange rate has risen to 1.1976 this morning ahead of a meeting between EU finance ministers. Politicians from Brussels and across the EU are due to discuss increasing the size of the ECB (European Central Bank) bailout budget.
ECB President Jean-Claude Trichet for instance believes the budget is too small to support nations including Portugal and Spain in the event they seek assistance. German Chancellor Angela Merkel though is reluctant to increase the bailout fund. She believes indebted EMU members ought to support themselves, while increasing the bailout fund would damage Germany’s credit rating.
This conflict is causing confidence in the euro to tank this morning.
UK
In the UK meanwhile, house prices rose 0.3% in December according to figures released by Rightmove this morning. This compares to a 0.3% decrease in prices the month before, and thereby indicates a modest recovery in the property market. This has buoyed sentiment toward sterling this morning.
The outlook for the UK is not entirely sunny this morning though. The national debt has ballooned to £1.5 trillion following the addition of the bank bailout figures to public sector sums, rising from under £1 trillion. This is statistical only: the Coalition’s budget plans already take these numbers into account. But they highlight (once again!) the urgent need to cut public spending.
US
Today is a public holiday in the US meanwhile economic data is scant.
The markets though are already focused on the upcoming meeting between Chinese Premier Jintao and US President Barack Obama in Washington. Topics of discussion are due to include China’s monetary policy (thought to be undermining US competitiveness on the global market) and human rights abuses. The results of these talks could strongly affect the US dollar – so stay tuned.
Coming Up
The British consumer confidence survey for December is due tomorrow. In addition the Bank of Canada’s interest rate decision is scheduled to be announced on Tuesday too.
By Peter Lavelle with specialist money transfer service Pure FX.
