Issue link: https://maltatoday.uberflip.com/i/188841
15 BUSINESS & FINANCE maltatoday, WEDNESDAY, 9 OCTOBER 2013 US government shutdown continues to weigh on the greenback An outline of the events shaping the moves behind major currencies throughout last week EUR: Last week the single currency traded at its highest level against the US dollar since February. The pair shot up to a level above 1.36 after Italian Prime Minister Enrico Letta won the confidence vote in parliament. The centre-left's leader Letta had to call for this vote after Silvio Berlusconi's party withdrew support for the Italian government at the beginning of the week. This was the reason that EUR/USD started lower into the trading week initially. With that being resolved and the German elections behind us, there doesn't seem to be any major political issue on the table as long as Greece does not become a problem again. The ECB meeting didn't bring any new information, as ECB president Draghi reiterated that inflation remains subdued and interest rates will be kept at historic low levels for an extended period. Another liquidity injection via an LTRO is currently not considered an option according to Draghi. The high in EUR/USD was at 1.3646 last week, just 66 pips shy of the 2013 high from 1 February. From a technical perspective, the pair is massively overbought and a larger retracement seems imminent. Nevertheless, as long as the deadlock in the US remains unresolved, a larger retracement in the pair seems very unlikely. USD: The greenback remained under pressure across the board last week due to investors pulling out of the dollar in light of the current US debt-ceiling deadlock. The shutdown of the US government entered into its seventh day this Monday, and at the moment there is no end in sight, as Republicans and Democrats still cannot resolve the conflict over raising the country's debt limit. The shutdown, which started on 1 October, leaves more than 750,000 federal employees out of work and is estimated to be costing the United States roughly 300 million USD per day in lost economic output. Due to the forced holiday of federal employees, the most important data point on the economic data calendar wasn't published last Friday – it is currently unknown when we will get the latest non-farm payroll figures, which are usually published every first Friday of the month. The last time the US government was in shutdown mode was in 1996; and one of the consequences was that the White House had to employ unpaid interns, among them a young woman called Monica Lewinsky… If Democrats and Republicans don't find an agreement until 17 October to raise the debt ceiling of $16.7 trillion, the United States of America will have to default on several payment obligations – a scenario with very negative consequences for all parts of economic life, not only in the US but also on a global scale. CHF: The Swiss franc is the target of safe haven capital flows once again. The main reason behind the strength of the franc is of course the US debt crisis. USD/CHF fell significantly below 0.90 last week before recovering on Friday. The 0.8950:0.9050 area provided support in February 2012 and 2013, and is the medium-term key support level for the dollar against the Swiss franc. EUR/CHF traded as low as 1.2220 last week before recovering on Thursday and Friday. We expect continued strength in the Swissie as long as the US government does not find an agreement regarding the debt ceiling. GBP: GBP/USD traded on levels not seen Thomas smith wins Bronze Award 2012 Thomas Smith Group was recently presented a Bronze Award by the Lufthansa Cargo Director for Italy, Malta, UK and Ireland, Thomas Egenolf, and Regional Manager Northeast Italy and Malta, Antonio J. Dinis Queiros. Lufthansa Cargo AG is a cargo part of the Lufthansa Group, operating worldwide airfreight and logistics services on behalf of Lufthansa, of which it is a wholly owned subsidiary. Founded in 1994, Lufthansa Cargo now ranks among the world's leading cargo carriers. Bernard Muscat, Cargo Assistant General Manager, and Ramon Azzopardi, Logistics Manager, accepted the award on behalf of Thomas Smith's Freight Forwarding division. This is the fourth consecutive award, yet the fifth award overall that Thomas Smith has achieved over the past eight years. Thomas Smith was nominated by Lufthansa Cargo in recognition of the strong support provided to the Participants successfully achieve the first CPD Award with Malta Business School The first wave of participants to achieve a Level 6 CPD Award in Statistical Data Analysis graduated on 30 September with Malta Business School. This was a group of 20 students who successfully completed an intensive four-module programme in statistical analysis. The ceremony took place at Malta Business School training centre in Birkirkara, where participants were presented with certificates by the Head of School, Lorenzo Mulè Stagno. This course was well received by professionals involved in surveying, research, data collection, and statistic analysis. However, since it takes the learner from basic to advanced knowledge, it was especially appealing for aspiring professionals working on their own research or in the field of data management. With a practical approach to learning, the programme combines the use of mathematical concepts and the conventional methods of generating and analysing statistics. All of this is facilitated with the use of predictive analysis software. Following the successful initiative of applying for NCFHE accreditation, more homegrown courses in different subject areas have been developed and are being launched in 2014 by Malta Business School. The new courses target the business and educational sectors, and applications for enrolment are already being accepted locally and internationally. "Malta Business School has always had the dual aims of quality programmes, as well as applicability of knowledge learned," Mulè Stagno said during his opening speech, concluding with the news that further courses ranging from awards to degrees and masters programmes in conjunction with foreign partners, are soon to be launched. For more detailed information on Malta Business School courses visit www.mbs.edu.mt or contact the team on 21 311326 airfreight and logistics services organisation during the year 2012, as well as the growth in volume registered. An awards ceremony organised by the Lufthansa Cargo Forum (LCF) was held at Ta Cenc, Gozo. Thomas Smith Group forms part of the LCF, which is made up of the five top-selling agents in Malta. A link to this article may also be found on our website: http://www. tcsmith.com/3-103-104/shipping/ corporate since January last week after comments from Bank of England Governor Mark Carney that he does not see any reason for further Quantitative Easing. This makes sense, considering the fact that the UK services sector had its strongest quarter in 16 years in the third quarter. Nevertheless, GBP/USD finished lower for the week after significant weakness on Thursday and Friday. This suggests that an important top might be at hand. EUR/GBP traded higher for the first time in weeks, another sign that the outperformance of the pound could be over. British pound traders now focus on this Thursday's Bank of England policy meeting. It is widely expected that policymakers will leave interest rates and the amount of asset purchases unchanged, but any surprise from the increasingly hawkish central bank could potentially lead to a significant move in either direction. JPY: The Japanese Yen gained for the fourth week in a row against the greenback – USD/JPY fell below 97 yen at the end of the week, as investors sought the relative safe haven status of the yen due to the US government deadlock. There was no major economic news from Japan last week and there were no surprises from the BoJ. As of next April the sales tax in Japan will be increased from five to eight per cent. In order to offset the negative effects on the economy, a five-trillion-yen stimulus plan was introduced. On the monetary policy side, the BoJ did not change anything during the meeting last week – the central bank will continue to expand the monetary base, targeting 2% consumer price inflation. Continued deadlock in the US is likely to be supportive for the yen in the short term. Gold: The price of gold started with a 50 dollar drop into the start of last week's trading, when it became official that the US government would enter into shutdown mode. We saw a larger recovery during the remainder of the week. Nevertheless, the shiny metal closed negatively for the week. From a technical perspective, we expect a continuation of the current recovery in metal prices and the price of gold to re-test the $1,400 per ounce level.