Scripts:

The dollar just keeps falling and falling and falling. When does the end come when we get some good news on the US housing market?

Ah, probably when US interest rates start to go up.But that's not going to be anytime soon. We know that the US economy is likely to weaken markedly. And of course the federal reserve has been cutting interest rates and may very well be forced to cut them again given that the subprime fallout is unlikely to end anytime soon indeed the expectation is that it could be another year before it fully washes through. Uh, so we, our expectation and the expectation of the markets generally is that the dollar will continue to weaken on the foreign exchanges although that will cause problems particularly in Europe where exporters are beginning to be concerned by the uncompe(titiveness), relative uncompetitiveness of their exports related to other regions of the world.

So what's the current thinking on when there might be another rate movement, in what direction?

Well it still is inconceivable that there could be another rate cut when the federal reserve's open market committee, the committee that sets interest rates in the United States meets again at the end of October, though inconceivable but the Fed really very well wants to see some more data from the real economy before it moves. Our expectation is that interest rates in the United States will be half a percent below where they are now by the end of the second quarter of next year.

Another interesting currency story overnight in Tokyo that pound sterling has been falling not massively but quite significantly because of an article in a British newspaper which basically points out that what's called the deposit protection plan that is it the bank of England has emplaced to protect depositors?(yes) basically hasn't got enough money in there ?

That's right.

This is a very interesting story. There has been some work done clearly behind the scenes to work out just how much is it in the compensation pots.

It's linked to Nothern Rock?

It is essentially linked to northen Rock. That's right because of course the government has promised to underwrite depositors' money. So that's quite rightly a number of people have attempted to have a look and see just how much money there is in the pots.Just not nearly enough. There isn't anything like enough. But apparently if the rumor is to be believed there's only 4.4 million pounds which of course isn't anything like the, is sufficient to cover the 20-odd billion of depositors' money . It could affect all the banks.... Well, it could affect all banks but Nothern Rock is absolutely the most affected.

Notes:

Pound Sterling: the basic monetary unit of Great Britain, divided (since 1971) decimally into 100 new pence