The coming US dollar crisis Message Board

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Strategies & Market Trends : The coming US dollar crisis

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To: maceng2 who wrote (22760)	9/16/2009 4:44:46 AM
From: RockyBalboa	Read Replies (2) of 71454

Stg pressured after King comments, UK jobs eyed * Euro up 0.2 pct at 89.23 pence * UK jobs data seen weak LONDON, Sept 16 (Reuters) - Sterling remained under pressure on Wednesday after sharp falls in the wake of dovish comments by Bank of England Mervyn King the previous day, which also prompted a sharp slide in UK government bond yields. King said a UK economic recovery would take a long time and he was considering cutting the rate paid on commercial banks' reserves parked at the central bank. Market players were also awaiting UK jobs data at 0830 GMT. The jobless rate is expected to rise to 7.9 percent while the number of people claiming jobless benefit is also seen rising broadly in August. "Any weakness in today's UK labour market data would only add to GBP's woes," said analysts at RBC Capital Markets. The euro was up 0.3 percent at 89.23 pence , after hitting a four-month high of 89.31 pence, according to Reuters data. The pound was down 0.1 percent at $1.6473 after hitting a one-week low of $1.6403 the previous day. In testimony to a Treasury committee, King said the "strength and sustainability of the recovery is highly uncertain." Traders were taken off guard by his comments on the bank reserve rate, which also sparked a rally in UK interest rate futures on the view the BoE will keep lending rates on hold for some time. Those comments poured cold water on the pound's sentiment, erasing earlier gains made on a rise in UK house prices and data showing a slower than expected fall in domestic inflation. The pound was pressured as UK bond yields fell. The two-year gilt yield sank to a record low on Tuesday, and the two-year yield spread between the euro and UK government bonds widened in favour of euro yields at its biggest margin since early January. (Reporting by Tamawa Desai; editing by Chris Pizzey) ((tamawa.desai@thomsonreuters.com; Tel: +44207 542 7018, Reuters Messaging: tamawa.desai.reuters.com@reuters.net)) Keywords: MARKETS STERLING/OPEN

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