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Hi All,

As promised here’s a brief update on what’s been happening with the US Dollar over the last week.


The pace of the decline in Consumer Credit (-3.5b) slowed in October as consumer activity and confidence gradually stabilise. However, credit card debt is still contracting, a record ninth straight month.

Retail Sales however were able to post a better than expected 1.3% m/m gain in November and record a second straight monthly increase. The University of Michigan Consumer Sentiment (73.4 from 67.4) survey also highlighted improving retail conditions and increased speculation that the Federal Reserve could be forced to start thinking about raising rates sooner than previously anticipated. Bernanke stirred up the interest rate debate by saying that high unemployment and stable expectations should keep inflation subdued and that inflation could move lower dampening expectations of interest rate hikes coming sooner than expectations.


In the lead up to last week’s highlight, the pre-budget report, there has been a lot of focus on debt-ridden countries. In fact the pre-budget report proved to be more political than economic due to the election now being less than six months away and the headlines were all about extra taxes on banker’s bonuses. Sterling reacted by dropping to a 2 month low of 1.6164 before stabilising. In fact, considering where we were 12 months ago, with GBP/USD dropping 10 cents in a day post Lehman Brother’s debacle, it is surprising to see GBP/USD so stable!

Otherwise the data emerging from the UK last week disappointed expectations marginally with both manufacturing and industrial production failing to grow in October.


GBP/USD Movement – High’s & Low’s of last week (07/12//09 – 11/12/09)

High: 1.6517
Low: 1.6168

A movement of: 2.16%

Difference on £200k

High: $ 330,340
Low: $ 323,360

Difference of: $6,980

Whilst FX isn't the most thrilling of subjects, the sooner you begin to think about your money transfers, the more likely you are to make your money go further.

A further update will be added next week.

Regards,

Jon Sermon
HiFX
 
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