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London Market Wrap

Posted by Joseph Trevisani on Feb 20, 2013 9:14:00 AM



February 20 Wednesday

The euro shed its gains in Europe and eased down by 65 points to 1.3365 from 1.3430 as risk appetite waned against the firm dollar. Comments from the German Chancellor Angela Merkel who said that the Eurozone states should not attempt to actively influence their currency exchange rates and the trading range of 1.3000 – 1.4000 was not out of the ordinary, helped the marrket return to the middle of the range for the past two weeks. .

Merkel said, “We are not in favour of an active exchange rate policy," in her statement to mark the 50th anniversary of the Eurozone’s panel of economic advisers.


Cable fell sharply by  150 points to the 15-month low of 1.5300 after the Bank of England Monetary Policy Committee (MPC) minutes from the February 7 meeting showed that some policy makers voted to increase their bond purchasing program by 25 billion pounds ($38.3 billion) to 400 billion pounds.

Governors Mervyn King, Paul Fisher and David Miles voted for additional quantitative easing. However, they were outvoted by the remaining six members of the Monetary Policy Committee. The February meeting showed the policy makers also considered an interest rate cut but voted unanimously for no change.

The UK Claimant Count for unemployment fell by 12,500 in January, better than the median estimate of -5,000 while the ILO Unemployment rate was unchanged at 7.8 percent in the 4th quarter. The employment sector showed very weak earnings growth.

The pound initially fell from 1.5437 to 1.5340 on the initial reaction to the MPC minutes and continued to decline to 1.5280. (-163 points at 12:30pm GMT). Euro-sterling rose to 0.8764 from 0.8685 (+79 points)



Chris Advincula

Market Strategist


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