Euro falls as shares slide

July 20, 2011 – 10:29 am

The weakening of the Euro is good for travellers from Britain to Tenerife

The euro dropped the most in a week against the dollar. Italian and Spanish bonds slumped, while shares slid on concern Europe’s debt crisis is worsening. Gold topped a record $1,600 an ounce and silver rose for a fourth day.

The single currency sank 0.9 percent to $1.4022 at 3:31 p.m. in Hong Kong. Yields on 10-year Italian bonds increased nine basis points, while Spanish 10-year debt yields climbed 14 basis points. The Stoxx Europe 600 Index retreated 0.7 percent and the MSCI Asia Pacific excluding Japan Index lost 0.7 percent. Standard & Poor’s 500 Index futures fell 0.6 percent. August- delivery gold rallied for a 10th day and silver jumped 2 percent. Wheat and corn both declined at least 1.3 percent.

European leaders are holding a special summit this week as they seek to contain the region’s debt crisis, after eight of the region’s banks failed stress tests and European Central Bank President Jean-Claude Trichet reiterated the ECB won’t accept as collateral bonds from a nation that defaults. President Barack Obama continued to reach out to lawmakers in both parties this weekend in search of a deficit-cutting deal as the Aug. 2 deadline for raising the U.S. debt ceiling looms.

“What you have at the moment is a lot of indecision,” Simon Flood, chief investment officer at Lion Global Investors Ltd., said in a Bloomberg Television interview from Singapore. “The biggest risk that concerns investors at the moment is what is going to happen in the U.S. People are obviously watching the developments in Europe.”

However a weak Euro is good news for tourists travelling to Tenerife from outside the Euro zone.

Source: Bloomberg Business Week

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Wages and labour costs up in Tenerife and the Euro zone.

June 24, 2011 – 10:45 am

Labour and wage costs up in Tenerife and the Eurozone.

The increase in wages and other labour costs accelerated in Tenerife and the euro zone during the first quarter of 2011, although wages continued to fall in Greece and Ireland—two members that are grappling with fiscal crises.

The European Union’s Eurostat agency  said wages and salaries in the 17 nations that use the euro were up 2.3% from the first quarter of 2010, a pickup from the 1.4% annual increase recorded in the final three months of 2010.

Total labour costs, which include taxes paid by employers, were up 2.6% from the first quarter of 2010, compared with a rise of 1.5% in the final quarter of 2010.

The pickup in wage growth will concern the European Central Bank, which raised its key interest rate in March in order to prevent a second round of price increases in response to higher commodity prices.

Source: Wall Street Journal

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Euro value falls after Greek government lose support for a further financial rescue package

June 17, 2011 – 1:20 pm

Euro falls against currencies making Spain and Tenerife cheaper for most people to visit at present.

The euro dropped the most in almost six weeks against the dollar after the Greek prime minister’s government lost political support as the European Union struggled to break a deadlock on a second financial rescue for the nation.

Europe’s shared currency fell versus most of its major counterparts, except for Sweden’s krona, Norway’s krone and Denmark’s krone, which dropped as commodity prices slumped. Demand for assets linked to economic growth also eased after reports showed slowing manufacturing in the U.S. Sterling fell versus the dollar after a report showed Britain’s jobless claims rose in May more than economists forecast.

“There is a lot of noise going on in Europe and in Greece,” said Sara Yates, a foreign-exchange strategist at Barclays Plc in London. “What we’ve seen from the opposition party, that they don’t seem to be on the same page wanting to push through fiscal austerity and more privatization, that is worrying.”

The euro fell 1.8 percent to $1.4181 at 5 p.m. in New York, from $1.4440 yesterday, after touching $1.4156, the lowest level since May 27. It weakened as much as 2 percent against the dollar, the biggest intraday drop since May 5, when it fell as much as 2.1 percent.

Source: BusinessWeek.com

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European Central Bank rate decision

May 11, 2011 – 1:55 pm

Euro stays virtually unchanged for travellers to Tenerife,Spain and Europe

A shortened trading week in the United Kingdom as well as the main focus for analysts being on the Bank of England and European Central Bank rate decisions gave rise to range trading dominating the market for the early part of last week.

The Pound fell across the board on Tuesday before settling into the weeks ranges after the release of weaker UK PMI manufacturing data. The main concern for markets is the stability of economic growth in Britain and how this impacts the Bank of England’s ability to manage inflationary pressures. The PMI manufacturing index fell to 54.6 from 56.7 which was a downwardly revised figure and triggered a selloff in Sterling due to the negative impact the figures had on interest rate hike expectations. Market are now speculating that the BoE may move back to a more dovish position and thus hold interest rate until early next year, although these expectations are frequently revised the impact on the Pound is obvious, the market sold Sterling. Market expectations were reaffirmed by later releases of construction and services PMI that weakened as well. The monetary policy decision from the Bank of England offered no surprises with interest rates of 0.50% and the £200bln asset purchase program both remaining unchanged.

The Euro saw little movement ahead of the ECB’s rate decision on Thursday as traders we focused on future interest rate expectations and divided on whether the next move higher by the ECB would come in June or July, this kept markets somewhat reluctant to take any positions ahead of the policy announcement. The European Central Bank kept interests on hold at 1.25% as expected but a shift in tone from ECB President Trichet during the post decision press conference where he took a less hawkish stance weighed heavily on the single currency. Trichet did not use any of the traditional ‘code words’ market have come to expect to signal further rate hikes rather opting for stating the Governing council would ‘monitor very closely’ developments in inflation. The result is an expectation amongst analysts that no rate hike will occur in June and that July is now more likely.

The Dollar had a number of influencing factors last week in the form of a broad-based commodity selloff and weakness in the Pound and the Euro due to changes in interest rate expectations. Silver has in recent months been pushed higher for the same reasons as gold; geo-political tensions, global economic uncertainty and the unprecedented cash injections by the Fed but the commodities movements have been far more exaggerated making it more attractive to speculators who took Silver sharply lower this week and triggered a knock-on effect slide in gold and oil, thus aiding Dollar gains. The ECB’s pause on interest rate hikes created Euro weakness that aided the Dollar further but US fundamentals in the jobs market came out to the downside putting the brakes on the Greenback trend higher until the release of stronger Non-farm payrolls figures. The data came out at 244K from the previous 216K that gave rise to initial Dollar strength but expectations remained that ultra-loose monetary policy from the Fed would continue which capped any gains made. 

Source: Baydonhill FX

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Spain’s economy is showing signs of recovery.

April 8, 2011 – 9:08 am

Spain’s central bank Governor Miguel Angel Fernandez Ordonez predicts the economy in Spain and Tenerife will improve

Despite the government’s best efforts, Spain’s economy is only giving signs of a very moderate recovery, and remains hindered by recent falling property prices. A significant rebound would only come with an upward movement in activity in the real estate sector which is still in its infancy.

In a welcome bout of openness, Spain’s central bank Governor Miguel Angel Fernandez Ordonez said Tuesday the reform of Spain’s savings banks, saddled with bad property loans like no other, should have taken place sooner.  The damage from Spain’s property problem  has left savings banks, which account for close to half of Spain’s banking business, unable to provide credit to the economy. That, combined with soaring unemployment tied to builders being left with nothing to build, has left Spain’s economy as key European underperformer. According to data released Tuesday, the purchase managers’ index for Spain’s services sector dipped back to negative territory in March, to 48.7, from 50.8 in February, indicating a decline in activity. That compares with a rise in the overall services PMI for the euro zone, to 57.2 from 56.8 in February.

Source: Wall Street Journal

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The peseta is back (in Murgados).

March 9, 2011 – 10:48 am

A small town in northern Spain has decided to reintroduce the old Spanish currency – the peseta – alongside the euro to give the local economy a lift. Shopkeepers in Mugardos want anyone with forgotten stashes of the old cash at home to come and spend it.

It is nine years since the peseta was official currency in Spain. But Spain’s economic crisis has forced some to be inventive. The hard times have seen thousands of businesses close and more than two million jobs go.

More than 60 shops in Mugardos, a small fishing town in Galicia on Spain’s northern coast, are accepting the peseta again for all purchases, alongside the euro. It is an attempt to get cash registers ringing – and help lift the town out of a long and painful economic slump.

Shopkeepers were sceptical at first, but they now say the scheme is a great success. People are travelling into Mugardos from outside just to spend the old currency they never got round to converting. One man visited the local hardware store this week with a 10,000-peseta note he had found at home, and had no idea what to do with. He is now the happy owner of a sandwich toaster.

The euro was introduced here in January 2002. Spaniards then had another three months to exchange their old currency at any bank. That cash can still be converted today, but only at the Bank of Spain itself, and it says a staggering 1.7bn euros ($2.4bn) of cash is still unaccounted for – stashed, perhaps, then forgotten; piles of coins that slipped down the backs of sofas; or even big notes kept by collectors.

As this is proving to be such a great success, maybe someone should attempt a similar project in Tenerife and the Canary Islands to boost the economy.

Source: BBC News

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Sterling slide against the euro and dollar is halted

February 17, 2011 – 12:18 pm

The sterling exchange rate against the euro affects those making property purchases inTenerife at present.

Sterling struggled for most of the week ahead of the Bank of England’s interest rate decision on Thursday. Recent speculation regarding potential interest rate hikes by the UK central bank saw traders buying into the pound but with low growth levels and inflation expectations indicating an increase in price pressures over the coming months the likelihood of a rate hike has diminished and concerns that premature monetary tightening could risk destabilising the UK recovery.

Economic data from the United Kingdom gave little support to the Pound which was batted around by risk aversion and movements in EUR/USD exchanges. The British Retail Consortium released its retail sales index which indicated sales had bounced back in January after a decline due to poor weather in December.

However, it is thought a rush to beat the VAT increase had contributed to the late push in higher retail spending. RICS house price data showed the pace of price declines eased for a third consecutive month. The data underlined the difficulty faced by the Bank of England in its decision over whether to raise interest rates, similarly a mixed performance in industrial and manufacturing output added to the argument that caution was required to support growth as well as tackling inflation.

The Bank of England rate decision saw the Pound react positively to the announcement and halted the currency’s slide versus the dollar and the euro. The UK central bank kept interest rate on hold at 0.50% and made no changes to its £200bln asset purchase program, as expected.

Expectations are still that the BoE may be forced to raise rates to combat inflation. A view supported by the release of higher than expected PPI inflation figures although late week geo-political tensions rising in Egypt prevented any gains as risk aversion dominated trade.

Clearly the sliding pound against the euro makes a difference for those who are trying  to buy property in Tenerife at present but also for  those who are selling and wish to change the euros back into pounds. The use of a good money exchange company such as Moneycorp will ensure that you get the best exchange rate for whichever currency that you have. The rates from these companies tend to be better than the high street banks. It really does pay to shop around.

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Weather | Tagged , , , , , , , , , , , , , | Comments (0)

This Spanish hotel really is rubbish!

February 1, 2011 – 1:28 pm

This hotel in Madid really is rubbish!

Madrid’s most unusual hotel has opened. It really gives a new meaning to the words, “That place was rubbish.”

The Save the Beach Hotel, constructed of 12 tonnes of litter collected from Europe’s beaches, is open to the public as part of the city’s International Tourist Fair. Designed by German artist HA Schult, the hotel, located in the city’s central Plaza de Callao, aims to raise awareness over pollution in the Med’s summer tourist resorts. 

“It shows the damage that we are causing to the sea and coast”, said Schult. “We live in an era of trash, and we run the risk of becoming trash.” Mexican beer brand Corona has also jumped on the campaign, giving competition winners the opportunity to spend the night in one of the hotel’s five bedrooms.

The International Tourist Fair has proved to boost further foreign interest in the flagging Spanish market, where real estate prices remain at record lows. However, a report conducted by Spanish property portal Kyero found that properties in the bargain lower end of the market (50,000 euro and below) saw an increase in enquiries.

Maybe time to look for  that bargain property in Tenerife or any of the Spanish islands?

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Weather | Tagged , , , , , , , , , , , , , , , , | Comments (0)

Euro on the rise

January 25, 2011 – 12:41 pm

Euro on the rise again.

The euro rose to the highest in more than two months against the dollar as the European Financial Stability Facility prepared to sell its first bonds, bolstering confidence in the region’s response to the sovereign crisis. The dollar weakened against higher-yielding currencies including the New Zealand dollar and the Swedish krona before a report that is forecast to show that U.S. home prices fell by the most in a year as before Federal Reserve policy makers begin a two-day meeting. The pound weakened against the euro for the sixth-straight day before data predicted to show the economy slowed in the fourth quarter. Australia’s currency slid as inflation slowed. “All indications are that demand will be very, very strong,” at the EFSF auction, said Beat Siegenthaler, a currency strategist at UBS AG in Zurich, who said the auction could be four-times oversubscribed. “It will be a supportive factor” for the euro, he said. The euro was little changed at $1.3641 at 8:44 a.m. in London after reaching $1.3687, the most since Nov. 22. It traded at 112.45 yen from 112.54 yesterday in New York, when it rose to 112.91, the highest since Nov. 23. The dollar weakened 0.1 percent to 82.44 yen.

The strengthening of the Euro is good news for those who are paid in Euros and send money back to the UK  from places such as Tenerife and Spain.

By Angela | Posted in Economy, General, Holiday, Miscellaneous Articles, Property, Tenerife, Things to Do | Tagged , , , , , , , | Comments (0)

Rough week for euro market after interest rate and bond concerns

January 18, 2011 – 11:55 am

A rough week for Euro market rates

A  degree of uncertainty over the results of the highly anticipated Portuguese bond auction saw the Euro trade cautiously in the early part of this week, Portugal has remained under the spotlight  recently as fear of contagion gripped markets over possible escalation in Europe’s ongoing sovereign debt problems.

The euro saw some marginal appreciation across most majors after speculation hit the market that the Swiss government may take action to temper the strength of the Swiss Franc versus the Euro and maintained the higher end of ranges with further speculation that the European Central Bank would be aggressively participating in the coming sovereign auctions. Portugal’s bond auction produced a successful result with the full €1.25bln being sold and the 10-yr yield average coming in lower than had been anticipated and thus meant a sustainable cost level for Portugal. Bond auctions from Spain and Italy followed that of Portugal just ahead of the European Central Bank rate decision. Both countries had successful auctions and like their Portuguese counterparts Spain’s bond yields also average lower and pushed the single currency higher.

The ECB kept interest rates unchanged at 1.0%, as expected, but surprised markets by changing the tone of its monetary policy stance to being a lot more hawkish. In his press conference ECB President Trichet warned of inflationary risk within the euro zone and stated the central bank was prepared to raise interest rates to ensure price stability. The governing Council saw evidence of short-term upward pressure to overall inflation and while medium-term pressure remained anchored risk to the upside had increased.

By Angela | Posted in Economy, General, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do | Tagged , , , , , , , , , , , | Comments (0)