It was announced last night that four of the major US banks have failed stress tests which indicates that should the US see another financial downturn these banks would not be able to survive. The banks which include Citigroup and SunTrust have seen their share prices fall as a result of this announcement and this has also led to a reduction in investor confidence which as we have seen in the past can have a damaging effect on exchange rates. When we see a drop in investor confidence it can lead to money coming out of riskier currencies and into so called “safe haven” which means we could see some market movement for currencies including Australian Dollar (AUD, New Zealand Dollar (NZD) as riskier currencies and also for Swiss Franc (CHF), Japanese Yen (JPY) and US Dollar (USD) as safe haven currencies. To find out more about how this could impact your currency transfer speak to one of our experienced currency brokers.
News from the UK has seen the government discussing super long-term bonds that could last for 100 years or possibly even longer. These bonds are being discussed to offer returns at around 2-2.5% however sceptics will say that with inflation at over 4% this would mean people who take out these bonds would in the short term at least be making a net loss. With the UK budget fast approaching we can expect to hear more about these super bonds and find out how they will work and the effects on the UK economy and therefore Sterling exchange rates.
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