Double Dip..true or false ?

Well, three months ago we were asking the same about the economy showing signs of recovery.. Was the doom and gloom all over or was this just a ‘dead cat bounce’ ?
I will have to admit, many of the tabloid newspapers three months ago were singing the praises of an apparent economic recovery, possibly delivery false hopes on the consumer, potentially sending us out to spend again; whereas many of the investment bank economic reports painted a different picture, with ‘double dip recession’ being many a headline. However the average individual never sees these reports and therefore is fairly reliant on tabloid front pages delivering the best indication for where we are going as a global economy. One thing seems certain; a floundering UK housing market with increasingly larger deposits required for most mortgages, will dull consumer confidence, causing a reduction in spending, which only escalates a double dip here in the UK. I hope I am wrong, but with aggressive government spending cuts and tax rises ahead, it is difficult to spot the silver lining or even light at the end of the tunnel for our struggling economy.

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US Dollar 15 year lows

With the US dollar trading at a 15 year low against the Japanese Yen, one would hope that the US will step in and support their buck; but such intervention may be someway off yet.. Why ? because the US has enough to worry about at the moment and no 1 on the agenda is the economy. On Tuesday the Fed announced that it would use cash from mortgage bond’s maturing to buy T-bonds, thus keeping borrowing costs low.

This in turn reduces the urgency of any interest increases, indicating some substance to a double dip recession. With little support to the US dollar right now current levels of 84 yen for every dollar are unlikely to be sustained, with expectations of a breach of 79.75 Yen, the all time low of this currency pair seen in 1995. Not forgetting that a week dollar is also great for US exports – item 2 on the US agenda…

Does The Buck stop here ? – GBP/USD hits key resistance level

The GBP/USD hit key resistance yesterday after an impressive, almost straightline rally over the last couple of months from 1.40 up to yesterday’s high of just over 1.59. Profit takers at yesterday’s technical level may take the steam out of this contract for the next few days, althgough a significant retracement is unlikely; range trading may well be the order of the day.