Eurozone concerns reduce risk appetite

Pound Sterling

Last week concerning developments in the Eurozone pushed the Pound to a five-week high against the Euro. However, despite an improvement in the UK trade deficit for September concern of underlying UK economic weakness pushed Sterling lower. As investors responded to the Bank of England’s decision to ease up on fiscal stimulus by selling the Pound the currency fell to a two-month low against its US rival. This week data releases, including UK House Price Balance and PPI Input could cause Sterling volatility.

The Pound is presently trading against the Euro in the region of 1.2501 and is trading against the US Dollar in the region of 1.5899

US Dollar

The US Dollar was able to gain on its riskier currency rivals on Friday as Eurozone concerns sapped risk appetite. The ‘Greenback’ recorded particularly notable advances against the Australian Dollar, Euro and Swiss Franc. Movement in the American currency will be limited today with US markets closed for a bank holiday. However, any developments in the Eurozone regarding Greece or Spain could cause fluctuations.

The US Dollar is presently trading against the Pound in the region of 0.6292 and is trading against the Euro in the region of 0.7870

Euro

The Euro received a knock on Friday as fears regarding the Greek debt situation returned full force. Now that the decision concerning the allocation of a further round of aid for Greece will be delayed the uncertainty will keep the Euro restrained. The common currency also suffered after several pieces of key Eurozone data ignited concerns over the weakening of Germany and France, the currency bloc’s core economies. Several pieces of significant Eurozone data will cause volatility in the Euro this week, including industrial production figures for September. Investors will also be paying attention to the outcome of the Eurogroup/EcoFin Finance Ministers’ Meetings.

The Euro is presently trading against the Pound in the region of 0.7995 and is trading against the US Dollar in the region of 1.2708

Australian Dollar

After posting three days of losses the Australian Dollar bounced back, benefiting from speculation that a wage report scheduled for release this week will support the perspective that interest rates won’t decline. Statistics which showed a second month rise in Australian home-loan approvals also helped the ‘Aussie’ to advance against several of its prominent peers. Investors will be looking ahead to tomorrow’s NAB Business Confidence/Conditions for October and Wednesday’s third quarter Wage cost index.

The Australian Dollar is presently trading against the Pound in the region of 0.6553, is trading against the Euro in the region of 0.8193 and is trading against the US Dollar in the region of 1.0413

New Zealand Dollar

Following the release of Chinese data which indicated that the world’s second largest economy was stabilising the New Zealand Dollar was able to gain. The ‘Kiwi’ recorded advances against the US Dollar, British Pound and Euro but was little changed against the Australian Dollar. There are a couple of pieces of important New Zealand data due for release this week including Food Prices for October and Consumer Confidence for November.

The New Zealand Dollar is presently trading against the Pound in the region of 0.5130, is trading against the Euro in the region of 0.6406 and is trading against the US Dollar in the region of 0.8161

Canadian Dollar

After recouping recent losses which saw it plummet to a three-month low against the US Dollar the Canadian Dollar ended trade on Friday little changed. Last week much of the movement recorded in the ‘Loonie’ was a result of global sentiment rather than Canadian concerns. This week fluctuations are likely to be caused by developments in the US and Eurozone, as well as Thursday’s Canadian Manufacturing Sales and Existing Home Sales figures. In addition investor’s will be focusing on the Bank of Canada review, also on Thursday, and Friday’s International Securities Transactions.

The Canadian Dollar is presently trading against the Pound in the region of 0.6298, is trading against the Euro in the region of 0.7873 and is trading against the US Dollar in the region of 1.0011

 

Richard Martin
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After working in business development for a major UK currency brokers for several years, Richard left Britain to help set up the company’s Australian office and now lives and works in Queensland; making the most of his new Down-Under lifestyle.