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Broadgate: Market News 24/2

24 February 2012

Volatility of currencies of Group of Seven nations fell to lowest level since August 2008 amid optimism the global economy is improving, giving investors more confidence to buy assets that appreciate in periods of growth.

Lower volatility makes investments in currencies with higher benchmark lending rates more attractive because the risk in such trades is that market moves will erase profits.

The dollar and the Japanese yen added to losses against a majority of their major counterparts today after reports showed U.S. jobless claims held at a four-year low and German business confidence rose to the highest level in seven months.

The pound strengthened for the first time in three days against the dollar after an index of U.K. factory orders rose to a six-month high in February.

“The manufacturing data was better than expected, it underlines that the sector isn’t doing that badly,” said Simon Smith, chief economist at foreign-exchange broker FXPro Group Ltd. in London. “For the moment we are still negative on the pound. We are still in that territory of wondering whether we will see negative growth in the first quarter of this year.”

The pound has fallen 2.1 percent against the euro this week as Greece won 130 billion euros ($173 billion) in aid, fueling optimism policy makers are containing the sovereign debt crisis.

Oil rose a seventh day, the longest winning streak since January 2010, as investors bet that fuel demand may climb after U.S. jobless claims held at a four-year low and German business confidence surpassed forecasts.

Oil also rose amid concern sanctions against Iran over the nation’s nuclear program will disrupt supplies from OPEC’s second-biggest crude producer. Turkiye Halk Bankasi AS, the Turkish bank that handles payments for Iranian oil, may stop processing transactions for supplies into Turkish refineries from July, according to an official at Tupras Turkiye Petrol Rafinerileri AS, which operates four refineries.

Tupras, as the refinery is known, won’t be able to use the bank from the end of June unless it gets a U.S. waiver, the official said yesterday, declining to be identified because of company policy. State-run Halk complies with all international regulations and standard practices on Iran, an official at the Ankara-based lender said by phone yesterday, declining to be identified for the same reason.

The information set out herein has been obtained from various public sources and is by way of information only. Broadgate Financial can accept no liability of any sort in relation thereto and readers should obtain their own verification of any statement before making any decision which may have any financial or other impact.

Neither the information nor the opinions herein constitute, or are they to be construed as, an offer or a solicitation of an offer to buy or sell investments.