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15 BUSINESS & FINANCE maltatoday, WEDNESDAY, 25 SEPTEMBER 2013 Fed fails to taper despite improvement in the labour market An outline of the events shaping the moves behind major currencies throughout last week Henry Philippson EUR: The impact of the landslide victory of Angela Merkel in the German federal election on Sunday was rather limited at the beginning of the current week. EUR/USD hovers in a tight range around the 1.35 level after rallying strongly during the course of last week. Merkel's Christian Democratic Union (CDU) party won almost the absolute majority of the vote, while the Free Democrats (FDP) did not make it to the Bundestag, with less than five per cent of the votes. The Alternative für Deutschland (AFD) also stayed below the five per cent watermark, which is good news for the eurozone. The AFD is in favour of a breakup of the euro zone and a return to the deutschmark. Merkel's victory was a vote in favour of a united Europe and against regionalism, but the market was unimpressed, as the outcome was widely expected. The only surprise was the FDP disaster. The single currency gained last week against the British pound after three consecutive weeks of losses. EUR/GBP trades were back above the widely watched 0.84 level, after trading as low as 0.8352 last week. Anticipation of a strong election result for Angela Merkel certainly helped. USD: Last week started with a disappointment for dollar bulls when it became known that Larry Summers had withdrawn his candidature for becoming the next president of the US central bank. Summers was the favourite candidate for succeeding chairman Bernanke when he stepped down. It is now widely believed that Janet Yellen will become the next president of the Fed. The dollar then took another massive hit, when the US Federal Reserve failed to taper its quantitative easing measures in its meeting last week. Apparently recent improvements in the unemployment rate were not enough to convince Fed officials to start cutting back on their monetary stimulus. Most traders were speculating that the Fed would kick off the gradual taper of its current monthly $85 billion bond-buying program, because it was believed that the latest improvements in unemployment data would be enough for the Fed to start cutting back on its quantitative easing measures. The current unemployment rate of 7.3 per cent in the US is above the official target of 7.0 per cent, and inflation did not pick up at all. Equities and US bonds rallied after the news; the CAC 40 did reach a new high for the year at 4227 before a consolidation started. The greenback was sold across the board, and EUR/USD rallied to levels not seen since February. Many economists, though, argue that the extended period of ultraeasy monetary policy will sooner or later lead to economic imbalances, which might create another asset price bubble. With the S&P 500 at all-time highs, these critics seem to have a valid point. The focus of the market will be on the final read of the second quarter US GDP on Thursday. Economists expect another upward revision to 2.6 per cent after the unexpected revision to 2.5 per cent from 1.7 per cent in the previous month. Should GDP surpass expectations, traders will very likely start speculating on a tapering in the October Fed meeting. AUD: Supported by another week of strong economic data reports from China, the Australian dollar managed to close higher against the greenback for the third week in a row. China is Australia`s biggest trading partner and an important source of demand for the Australian mining sector. Economic stabilisation in China translates into an improved outlook for the Australian economy and expectation for higher rates eventually. After a socalled 'higher low' was formed at the end of August, the Australian currency rallied more than 500 pips against the greenback and traded as high as 0.9535 before a technical consolidation started, as traders took some profits off the table. From a technical perspective, we expect another run towards last week's high. There is not much event risk ahead until the US non-farm payroll numbers, which are due in two weeks only. Gold: Gold was very volatile last week following the Fed decision not to touch the QE3 program. Traders were mostly anticipating a $5 to $10 billion cut in the monthly bond-buying program, but the Fed apparently wanted more evidence that the recovery in the labour market is back on track. Traders who were speculating on a continuation of the recent drop in the price of gold had to cover their positions – the shiny metal rallied almost $70 per ounce on Wednesday and ended a three-week losing streak. Most of Wednesday's gains were given back, though, and the metal only gained 0.52 per cent on a week-to-week basis. Henry Philippson is a trader at RTFX Ltd Shireburn Software exhibits Vodafone Malta announces new CEO in Silicon Valley Vodafone Malta has announced that its Chief Executive Officer, Balesh Sharma, will be leaving to take the post of CEO of Vodafone's operations in the Czech Republic, effective 1 November Balesh Sharma started his assignment at Vodafone Malta in February 2011. Since that time, Vodafone Malta has consolidated its market share leadership and managed to improve financial performance despite adverse economic conditions and a very challenging market sector. It also underwent a change in organisational culture with the move to the new headquarters in SkyParks. "I feel extremely privileged to have led such a dynamic and passionate team at Vodafone Malta. We worked hard, thereby achieving such positive results, but we also learned how to do it with gusto. I'll never forget when we did the Harlem Shake, went around Malta partying our way to Skyparks in an open top bus or got to hang out with Lewis Hamilton!" said Sharma. He added, "On a professional level, my experience here has been very enriching. On a personal level, living in Malta has been a sheer delight for me and my family. We will cherish the friendships and fond memories of Malta forever". Sharma joined Vodafone in 2003 and has since held a variety of senior roles. Before coming to Malta, he had been CEO of Vodafone in the Gujarat region since 2008. Sharma will stay on the board of directors of Vodafone Malta, initially as a non-executive chairman. Shireburn Software continues its internationalisation drive by exhibiting the Concessionaire Analyzer+ software product at the ACI North America exhibition in the heart of Silicon Valley in San Jose, California Amanda Nelson Sharma will be replaced in Malta by Amanda Nelson, who comes with 15 years of experience with Vodafone Group plc. She joined the company in 1998, working in the central finance team during the period when Vodafone was expanding globally. Since then Nelson has held various senior finance positions in New Zealand, Japan, UK and the Netherlands. In 2009 she became chief financial officer of Vodafone Netherlands and was a key player in the management team that made the company the most successful mobile operator in that market. In 2012, Nelson became a commercial director, responsible for a market segment of two million customers and €1 billion revenue. Nelson's experience in both commercial and financial leadership, and her experience across multiple markets, will mean that Malta can continue to benefit from being part of this global and connected group. Nelson is from the UK, is married and has four children. Shireburn Software has a successful track record of development of niche software products for the international market and once again is first to market, this time with a solution that helps airports to boost their non-aviation sector revenues. CA+ is a unique solution that allows airports to collect their sales data, visually analyse the sales patterns through the business intelligence module and undertake billing for an airport's concessions. "Airports obtained US$46 billion in revenue globally in 2011 from nonaviation sources such as retail, food and beverage and car parking, and Concessionaire Analyzer+ is the first solution that addresses this particular sector – not just from the mechanical billing aspect but it also enables airports to undertake deep analysis of their performance with a view to boosting these revenues," said John de Giorgio, managing director of Shireburn Software. Following a number of successful events and fruitful contacts made within Europe and Asia, Shireburn is now seeking to expose its product to new markets in North America. Shireburn is currently undertaking an implementation at a third international airport and is in discussions with airports in almost every corner of the globe. Shireburn is also discussing collaboration agreements with three companies, to focus on business development and implementation in geographic regions including Latin America, the Middle East and Germany. Shireburn has exhibited at four events so far this year and, after San Jose, will be exhibiting and speaking at the Smart Airports conference in Munich in October and the Airports Exchange Exhibition in Doha, UAE, in November. CA+ was designed and developed entirely by the Shireburn team in Malta. Shireburn develops of an array of robust and integrated business solutions encompassing accounting, inventory, payroll and HR, retail, e-commerce, business intelligence and document management solutions, amongst others. For more information about Shireburn and its business solutions, contact Shireburn Software at 2131 9977 or info@shireburn.com. YOUR FIRST CLICK OF THE DAY www.maltatoday.com.mt

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