Monthly Archives: September 2009

The world economy is gaining momentum, but there are some currencies that are suffering from an awkward and uneven recovery. Most of Europe and Great Brittain are a good example of that. In Germany, retail sales rose for the first time in three months. The German unemployment rate was unchanged and their manufacturing beat expectations. All of this suggests a faster recovery than other countries in the same region.

In the UK, although there have been some improvements in housing data, manufacturing fell lower than expectations, which is sending their currency lower. Due to the uneven nature of their recovery, they may need to reduce interest rates on reserves, to beow zero.

The Euro and the Sterling are not fairing well against the US Dollar this morning and it is once again showing us that the data still does not correlate with the currency movement. The alignment is off and the economic recovery is uneven.

The Aussie fell after their Reserve Bank left the cash rate unchanged at 3%. The issue is that they did not give a suggestion about a rate hike in the near future. The other problem is that we are seeing a slight reach for growth, as opposed to a strong rebound, as indicated by the greater than expected account deficit. Although their exports dropped, their manufacturing rose for the first time in fourteen months and building approvals rose more than twice that of expectations.

So in short, an uneven recovery is causing a price disturbance as the world currency markets try to find their way.