Yesterday Sterling sank to a two-month low against the US Dollar. The Pound’s losses were inspired by comments made by bank of England Governor Mervyn King who asserted that the UK economy could well shrink again in the fourth-quarter. King also stated that it would be difficult for the economy to grow at a reasonable pace without further drops in the exchange rate. Today movement in the Pound is likely to occur as a result of UK retail sales figures for October and developments in Europe and the US.
The Pound is presently trading against the Euro in the region of 1.2428 and is trading against the US Dollar in the region of 1.5840
After President Barack Obama declared that higher tax payments from wealthier Americans would have to be part of any fiscal deal hopes for resolution to the fiscal cliff dilemma were dashed and fears for global economic recovery grew. As a result the safe-haven US Dollar was able to continue advancing against its main currency rivals despite a report detailing a drop in US retail sales. Today investors will be focusing on US Core CPI data, Unemployment Claims and the Philly Fed Manufacturing Index. If any of these figures should come in lower (as predicted by economists) the ‘Greenback’ could record losses as trade continues.
The US Dollar is presently trading against the Pound in the region of 0.6309 and is trading against the Euro in the region of 0.7846
Although the Euro recouped some of its recent losses against the US Dollar on the back of hopes that the situation in Greece could soon be resolved any gains are likely to be short lived. Data already released this morning has shown that the French economy, the second largest in the Eurozone, barely grew in the third quarter and that unemployment in the nation is on the increase. Significant volatility could occur in the common currency today following the release of Eurozone flash third-quarter GDP.
The Euro is presently trading against the Pound in the region of 0.8041 and is trading against the US Dollar in the region of 1.2745
The Reserve Bank of Australia announced that it had increased sales of the ‘Aussie’ in October to a selection of buyers which included foreign central banks and as a result the Australian Dollar dropped against several of its main rivals. Demand for riskier assets like the ‘Aussie’ was also weakened following indications of global economic flagging and the Israeli air strike on the Gaza strip. The South Pacific currency was able to rally against the Japanese Yen however after Japan’s opposition leader proposed limitless central bank easing until the world’s third largest economy stabilises.
The Australian Dollar is presently trading against the Pound in the region of 0.6532, is trading against the Euro in the region of 0.8123 and is trading against the US Dollar in the region of 1.0354
New Zealand Dollar
After posting a notable drop against safe-haven rival the US Dollar the New Zealand Dollar was able to enjoy a late rally just prior to the close of trade. With the likelihood dwindling of a compromise being reached which could halt the US fiscal cliff the global economic outlook suffered and the attractiveness of riskier currencies lessened, triggering the ‘Kiwi’s decline. But a survey which showed improved consumer confidence in New Zealand and a rise in the nation’s Performance of Manufacturing Index allowed the New Zealand Dollar to modestly rebound.
The New Zealand Dollar is presently trading against the Pound in the region of 0.5122, is trading against the Euro in the region of 0.6373 and is trading against the US Dollar in the region of 0.8117
Worries that the impending US fiscal cliff will not be prevented ensured that the Canadian Dollar’s bearish trend continued. The ‘Loonie’ extended losses against its US rival, dropping 0.19 of a Cent before the close of trade. Over the course of a week the Canadian Dollar has dropped by roughly 1.2 US Cents. If the US fiscal cliff occurs demand for resources like metals and oil will plummet which will have an adverse affect on resource-dependent currencies like the Canadian Dollar.
The Canadian Dollar is presently trading against the Pound in the region of 0.6298, is trading against the Euro in the region of 0.7833 and is trading against the US Dollar in the region of 0.9982