Betfair Official Blog

US bankers hope to jump into bed with the Scandinavians, and who can blame them

Daily View - 31st March...

Talk of a Fed communication with the Nordic central banks on their state bailout of the banking sector in the mid nineties is the kind of rumour that had such a dire effect on HBOS. This one, though is in the newspapers so it must be true!

Unfortunately for the US, the Scandi countries are a minor player so the Nordic recession of the time did not influence the rest of the world, and so, powered by external trends, the region was able to grow out of its problems. If the Fed is forced into a bailout on this scale the outlook will be far from rosy, unlike the cheeks of a sterotypical Dane. The US and European investment banks, for all of their demonising, are still the engine for investment growth of half the planet. If we take away their entrepreneurial ability and shackle them with massive regulatory oversight, who will take up the reins?

Slightly disappointing on the open after last week's reasonable performance as the fall-out in the US markets on Friday evening and the drop in the Far East this morning have taken their toll. The FTSE's opening trading range has us off about 50 pips at 5640 and dealers are nervously waiting to see if this weakness follows through into the late morning/early afternoon sessions. The 5720 resistance level, mentioned before in previous comments, has held again and we are now focussing on the lower end of the trading range at around 5450.

Currency markets were looking Dollar friendly this morning, but the pressure on the Greenback appears to be reasserting itself and both the Yen and the Euro have bounced from early weakness and are now slightly to the good on the weekend levels. Unfortunately the Pound is down even against the Dollar, and is now at 0.7960 vs the Euro, a new all-time low.

As the equity markets slump, thus the demand for Gold increases once more. The yellow metal is now some 10 bucks higher this morning but the buying seems to be coming from Europe for once rather than the Far East/US. We are still some way off the levels of last week (which tended to oscillate around 950 level,) but at 938.0-938.5 the recovery from Friday's weakness is underway.