Ldn FX: Sterling In Freefall As Global Recession Fears Bite Oct 24 / 06:22
LONDON, October 24 (MNI) - Sterling went into freefall on Friday as
risk aversion and tumbling stocks caused carnage in the currency
markets.
Cable had hit Asian highs at $1.6290, opening in Europe around
$1.6008 and soon dropped under $1.6000. Liquidity was appalling as
the rate tumbled lower, taking out big figures with ease.
Weak UK GDP data added to the heavy tone, adding to global
recessionary fears, with sterling-yen losing 10-big figures on the
morning to trade under Y140.00, euro-sterling hitting a fresh lifetime
high at stg0.8195 and cable losing 730 points on the session, the
largest one-day fall in 37-years, according to traders.
STERLING SUMMARY: Opened early Europe at $1.6008, stg0.7970
--A huge sell-off in sterling-yen pulled cable lower in overnight
dealing after the rate had closed in NY around $1.6220. Cable tumbled
back to take out Thursday's lows at $1.6043, finding an
initial base at $1.6027 towards the end of the session. Sterling
continued to trade heavy versus the euro in a stg0.7952/89 range.
--Sterling was under renewed pressure into European dealing, soon taking
out the overnight low, with traders once again reporting an extreme
lack of liquidity. The move gathered momentum on the break of $1.6000,
with the rate falling to a $1.58 handle initially. There was little
respite as European stocks opened up deep in negative territory.
Sterling-yen went into freefall, tumbling under Y150.00, pulling cable
down to $1.5660 ahead of the UK GDP data. This came in much weaker
than forecast, adding to the heavy tone. With sterling-yen tumbling to
eventual lows at Y139.12, 20-big figures away from the Asian high,
cable plummeted, taking out big-figures with ease down to $1.5270, a
six-year low.
UK DATA: Q3 Preliminary GDP -0.5% q/q; +0.3% y/y; median -0.2%;0.6%
------------------------------------------------------------------------
GDP growth fell 0.5% q/q in Q3, below the median forecast, and the
first fall since Q2 1992. It was the largest decline since Q4 1990.
Services had the largest downward impact on growth, falling 0.4% q/q,
knocking 0.3% off q/q growth. Production fell 1% q/q, knocking 0.2%
off growth. Within services the largest downward impact was surprisingly
not from business services and finance - which accounted for 0.1pp of
the fall in quarterly GDP. Distribution, hotels and catering output was
down 1.7% q/q, hitting GDP 0.3pp. NS said this was mainly due to motor
trades and wholesale services. Elsewhere construction was down 0.8% m/m
while agriculture was up 0.5%. Overall this shows output in the economy
declining by even more than expected and is likely to boost expectations
that the BOE will cut rates by 50bps at the Nov meeting, if not by
more.
BOE: BOE Sentance: Risks Of Severe Recession Have Increased
-- Need To Factor Negative Econ. Into Policy Making
-- Econ. Data Shows Negative Econ. Forces Rising
-- Hopefully Can Avoid Deep, Severe Recession
-- BOE Sentance: Global Econ. Has Weakened In Last Few Months
-- Construction, Property Sectors Are Weakest
LONDON, October 24 (MNI) - Sterling went into freefall on Friday as
risk aversion and tumbling stocks caused carnage in the currency
markets.
Cable had hit Asian highs at $1.6290, opening in Europe around
$1.6008 and soon dropped under $1.6000. Liquidity was appalling as
the rate tumbled lower, taking out big figures with ease.
Weak UK GDP data added to the heavy tone, adding to global
recessionary fears, with sterling-yen losing 10-big figures on the
morning to trade under Y140.00, euro-sterling hitting a fresh lifetime
high at stg0.8195 and cable losing 730 points on the session, the
largest one-day fall in 37-years, according to traders.
STERLING SUMMARY: Opened early Europe at $1.6008, stg0.7970
--A huge sell-off in sterling-yen pulled cable lower in overnight
dealing after the rate had closed in NY around $1.6220. Cable tumbled
back to take out Thursday's lows at $1.6043, finding an
initial base at $1.6027 towards the end of the session. Sterling
continued to trade heavy versus the euro in a stg0.7952/89 range.
--Sterling was under renewed pressure into European dealing, soon taking
out the overnight low, with traders once again reporting an extreme
lack of liquidity. The move gathered momentum on the break of $1.6000,
with the rate falling to a $1.58 handle initially. There was little
respite as European stocks opened up deep in negative territory.
Sterling-yen went into freefall, tumbling under Y150.00, pulling cable
down to $1.5660 ahead of the UK GDP data. This came in much weaker
than forecast, adding to the heavy tone. With sterling-yen tumbling to
eventual lows at Y139.12, 20-big figures away from the Asian high,
cable plummeted, taking out big-figures with ease down to $1.5270, a
six-year low.
UK DATA: Q3 Preliminary GDP -0.5% q/q; +0.3% y/y; median -0.2%;0.6%
------------------------------------------------------------------------
GDP growth fell 0.5% q/q in Q3, below the median forecast, and the
first fall since Q2 1992. It was the largest decline since Q4 1990.
Services had the largest downward impact on growth, falling 0.4% q/q,
knocking 0.3% off q/q growth. Production fell 1% q/q, knocking 0.2%
off growth. Within services the largest downward impact was surprisingly
not from business services and finance - which accounted for 0.1pp of
the fall in quarterly GDP. Distribution, hotels and catering output was
down 1.7% q/q, hitting GDP 0.3pp. NS said this was mainly due to motor
trades and wholesale services. Elsewhere construction was down 0.8% m/m
while agriculture was up 0.5%. Overall this shows output in the economy
declining by even more than expected and is likely to boost expectations
that the BOE will cut rates by 50bps at the Nov meeting, if not by
more.
BOE: BOE Sentance: Risks Of Severe Recession Have Increased
-- Need To Factor Negative Econ. Into Policy Making
-- Econ. Data Shows Negative Econ. Forces Rising
-- Hopefully Can Avoid Deep, Severe Recession
-- BOE Sentance: Global Econ. Has Weakened In Last Few Months
-- Construction, Property Sectors Are Weakest
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