Market Review – 11/05/2010 21:40GMT
Cable rises as Conservative Cameron takes over as U.K.’s new PM
The British pound rose against dollar and euro after Conservative leader David Cameron took over as U.K.’s new prime minister. The pair also drew support from optimism over a potential Conservative and Liberal Democrats coalition.
The British pound traded with a soft bias on Tuesday initially in Asia and briefly dipped to 1.4720 in Europe. However, the pair later rebounded from there and rose sharply to an intra-day high of 1.5005 on optimism that Britain’s Conservative party might be nearing an agreement to form a new coalition government with the Liberal Democrats. Gordon Brown later officially resigned as Prime Minister and leader of the Labour party with immediate effect. Conservative leader David Cameron subsequently became Britain’s new Prime Minister. Cable pared gains on profit taking before stabilising.
The single currency continued to decline as investors were worried if the almost $1 trillion (750 billion euros) bailout package would help the region’s most-indebted nations to contain deficits. Despite brief recovery to 1.2803, price then extended decline from Monday’s high of 1.3095 and fell to as low as 1.2656 in NY afternoon. In other news, Greece was likely to submit a request for the first installment of a 110 billion euros ($147.6 billion) aid package from the EU and IMF. Finance Minister of Greece also said the government would ask for a total of 20 billion euros, in part to refinance an 8.5 billion euro 10-year bond that would mature on May 19. Besides, Fed’s Bernanke described EU’s almost $ 1 trillion package as ‘ not a panacea ‘ and that wasn’t a cure during a close-door briefing with the banking committee.
Gold rose above its previous high of $1226.60 an ounce set on Dec. 3, 2009, hitting an all-time high at 1233.90 an ounce in NY session as worries on European debt crisis drove investors to buy gold as a safe-haven asset.
Economic data to be released on Wednesday include: Japan Leading indicators , Germany GDP , Swiss Combined PPI , U.K. Claimant count , U.K. ILO Unemployment rate , EU GDP , Industrial production , Canada Trade balance , Exports, Imports , New housing price , U.S. trade balance and Fed budget.