Pensioners Hit by Pound Falling

The one million British pensioners who live abroad will be hit hard by the plummeting value of the pound, which is likely to fall even further, one leading investment bank has warned.
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By. Harry Wallop, Consumer Affairs Editor
Last Updated: 12:42PM GMT 18 Nov 2008

Pensioners and holidaymakers hit by pound falling to 23-year lows Photo: GETTY

JP Morgan forecasts that sterling (GBP) will drop a further 13 per cent against the dollar (USD) and 8 per cent versus the euro (EUR), as foreign investors shy away from investing in the currency.

The pound will hit a low of $1.28, a level not seen since 1985, and sink to a record low of 92p per euro in early 2009, the bank forecast.

If the pound, which has already fallen strongly this year, slides further it will hit millions of holidaymakers who will see the price of foreign trips increase.

It will also hit one million expatriate pensioners in Europe, who receive their pensions in sterling, but have to pay their living costs in foreign currency.


Sources :
Telegraph.co.uk : Pensioners and holidaymakers hit by pound falling to 23-year lows

ECB Expect to Cut as Price Pressures Alleviate

Written by David Song, Currency Analyst
Friday, 14 November 2008 11:00:14 GMT

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Fundamental Headlines

1. Citi to Cut More Jobs, Raise Rates on Its Plastic – Wall Street Journal
2. Chances Are Slim for Stimulus, Auto Aid Till '09 – Wall Street Journal
3. New wave of CDOs at risk of default – Financial Times
4. Nomura Said to Plan Job Cuts Among Ex-Lehman Staff – Bloomberg
5. Shareholders Pay Price as Barclays, UniCredit Raise Capital Like "Casinos" – Bloomberg
6. Sun Microsystems Plan To Cut Jobs - RTTNews
   

EURUSD – The Euro-Zone is facing its first recession in 15 years as the advanced GDP reading for the third quarter showed that the economy contracted another 0.2% from the previous quarter.

1. Germany, the largest economy in Europe, fell into a recession for the first time since 1996.
2. Italy, the third largest economy in the Euro-Zone, is facing the worst recession since 1992.
3. Fears of a deep and prolong recession may lead the European Central Bank to lower the benchmark interest further as growth prospects deteriorate, and may continue to ease policy well into the next year as price pressures alleviate.
4. The headline inflation reading for the Euro-Zone fell to 3.2% from 3.6% in September as food and energy costs continue to pullback from their record highs.
5. Prices pressures in Germany cooled for the third consecutive month in October as the final CPI reading showed that the headline reading slipped to 2.5% from 3.0% in September.
6. Falling commodity prices paired with the drastic slowdown in the economy has certainly helped to lower inflation, which should allow the European Central Bank to hold a dovish outlook over the near-term. As price pressures weaken further, the ECB may cut borrowing costs well into the next year in order to avoid a severe recession.
7. Meanwhile, Credit Suisse overnight index swaps are showing that investors expect the central bank to the interest rate by at least 100bp over the next 12 months, which could drag on the euro going forward.

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Source :
1.ECB Expect to Cut as Price Pressures Alleviate, Friday, 14 November 2008 11:00:14 GMT.

Oil Prices Surge Above $64

Crude oil surged on Monday morning as the Chinese bailout plan may help struggling energy demand. Light sweet crude for December delivery moved to $64.13, up $3.09 for the session. Oil reached as high as $65.56 in electronic trading.

In an effort to battle the global economic crisis, China has unveiled ten major steps, the Beijing-based State Council said Sunday. The fourth-largest economy said it would relax its credit conditions, reduce taxes and plans a stimulus package amounting to about 4 trillion yuan or nearly $570 billion.

The dollar also saw modest weakness against other major currencies, which added to oil's hedge appeal. The dollar traded near 1.2900 against the euro, compared to a 2-year high of 1.2328 reached late last month.

Oil closed slightly higher on Friday but still lost more than 10% on the week. Oil hit as low as $59.97 late Thursday night, its lowest mark in 19 months.

Crude has lost more than 40% over the last 1 1/2 months amid ongoing demand worries caused by the global financial crisis. Oil has lost more than 55% from its record $147.27 reached in July.

At the pump, prices have continued to head lower. According to AAA's daily fuel gauge report, a regular gallon of gasoline fell to $2.24, down from $2.259 on Friday. A month ago, prices were at $3.291 and a year-ago gasoline averaged $3.10.

In other energy trading, natural gas added 48.3 cents to $7.24 per million British thermal units. Heating oil climbed to $2.0656, up 8.7 cents and RBOB gasoline added 5.66 cents to $1.4061.

In metals, gold surged $20.50 to $754.70 an ounce. Silver climbed 39.7 cents to $10.36 an ounce while copper added 13.75 cents to $1.8345 per pound.


Source :
1. Oil Prices Surge Above $64 11/10/2008 10:07 AM ET