Sterling slipped against USD

Pound Sterling

Yesterday the Pound dropped against a broadly firmer US Dollar after concerns regarding the US fiscal cliff threw global economic recovery into doubt. Sterling was held lower by comments made by Bank of England Deputy Governor Charlie Bean. Lingering fears that the UK economy could return to recession in the fourth quarter were exacerbated when Bean asserted that the BoE was prepared to implement further monetary easing. Little in the way of significant economic news for the UK means that developments in the US and Europe will be the main causes of Pound movement.

The Pound is presently trading against the Euro in the region of 1.2344 and is trading against the US Dollar in the region of 1.6012

US Dollar

Risk aversion dominated the market yesterday with investors turning to safe-haven assets in response to fiscal cliff concerns. This caused the ‘Greenback’ to turn bullish against the majority of its higher-risk rivals and post significant advances against its Canadian counterpart. However, the ‘Cable’ later dropped to within 0.5 per cent of a monthly low against the Euro. Of interest today are US congressional leaders continuing budget negotiations, US 3Q GDP figures, initial jobless claims and pending home sales. If any of these indicators come in lower than anticipated the US Dollar could experience significant volatility.

The US Dollar is presently trading against the Pound in the region of 0.6247 and is trading against the Euro in the region of 0.7708

Euro

As the safe-haven US Dollar and Japanese Yen advanced the Euro fell. Although it later recouped some of its losses against the US Dollar and posted advances against the Pound persistent uncertainty regarding the issue of Greek aid (despite a deal being reached earlier in the week) tempered gains in the common currency. The Euro was also pushed lower after risk appetite was dampened by concerns regarding the current US budget negotiations and impending fiscal cliff. Fluctuations in the currency could occur today following the release of German unemployment change and Eurozone climate indicator figures.

The Euro is presently trading against the Pound in the region of 0.8105 and is trading against the US Dollar in the region of 1.2976

Australian Dollar

Hopes that the US could avoid the looming fiscal cliff caused a rebound in equities, allowing the ‘Aussie’ to bound close to an eight-week high against its US counterpart. However, a report showing that Australian business investment grew at a slower pace in the third quarter kept demand for the Australian Dollar limited. Today the main cause of movement in the South Pacific currency will be the ongoing budget discussions in the US.

The Australian Dollar is presently trading against the Pound in the region of 0.6536, is trading against the Euro in the region of 0.8067 and is trading against the US Dollar in the region of 1.0464

New Zealand Dollar

After US House Speaker John Boehner expressed confidence in the ability of US leaders to avert the fiscal cliff the New Zealand Dollar was able to retain the 0.4 per cent gains made against the ‘Greenback’ yesterday. The ‘Kiwi’ then advanced a further 0.2 per cent. A lack of volatile data for New Zealand means movement in the currency will be tempered today unless influential announcements are made in the US or Europe.

The New Zealand Dollar is presently trading against the Pound in the region of 0.5150, is trading against the Euro in the region of 0.6368 and is trading against the US Dollar in the region of 0.8260

Canadian Dollar

After recording significant declines against its US rival the ‘Loonie’ was able to rebound following a US official’s implication that a US budget compromise could be reached in order to avoid the impending fiscal cliff. The Canadian Dollar’s rally could be extended if more positive developments result during the course of today’s US budget negotiations. Investors will also be paying attention to today’s Canadian 3Q current account figures and waiting for tomorrow’s annualised quarterly GDP data.

The Canadian Dollar is presently trading against the Pound in the region of 0.6300, is trading against the Euro in the region of 0.7773 and is trading against the US Dollar in the region of 1.0086

 

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.