August 2nd-August 6th, 2009
International Markets
This week the USD hit a multi-month lows against the Euro and the Sterling as market players awaited policy decisions by the European Central Bank and the Bank of England. Caution ahead of the rate decisions prevented further gains in the currencies, though analysts said sentiment remained buoyant as European shares rose 1.1 percent. Both the ECB and the BoE are seen leaving interest rates on hold at 1.0 and 0.5 percent respectively, though the market will be looking for whether the central banks have adopted a more optimistic tone on the economy. Interest is expected to centre on whether the BoE will increase asset purchases under its quantitative easing programme, although analysts see this as less likely after recent better-than-expected UK data. Elsewhere, the Australian dollar rose and the New Zealand dollar fell as better-than-expected Australian employment data contrasted with a higher-than-expected jobless rate in New Zealand. Data showed that 32,200 jobs were created in Australia in July, far better than forecasts for a loss of 20,000 jobs, adding to the risk of an early rise in interest rates.
Local Money Market
The Call money rate traded at very low rates this week and was in range of 0.1- 0.15. A few stray deals traded were done at higher rates. Excess liquidity was the cause of such low rates.