US debt ceiling in focus

Pound Sterling

After recording significant gains against its safe-haven rivals the US Dollar and Japanese Yen the Pound fell back as optimism regarding UK and US economic recovery decreased and investors turned to lower risk assets. This morning data revealed that UK house prices fell in December and could continue to fall this year, with a ‘weak economic recovery’ cited as the primary cause. If the UK construction PMI figure also disappoints the Pound could decline further over the course of trade today.

The Pound is presently trading against the Euro in the region of 1.2337 and is trading against the US Dollar in the region of 1.6229

US Dollar

Although US lawmakers managed to reach an accord which allowed them to sidestep the anticipated ‘fiscal cliff’, further concerns have emerged over whether they will now be able to agree on raising America’s debt limit. With the US debt ceiling in focus risk appetite decreased and the safe-haven ‘Greenback’ was able to advance on its higher yielding rival the Euro. This current crisis will be of interest for some time to come but today investors will also be paying attention to US initial jobless claims/employment change data and the release of minutes from the FOMC meeting.

The US Dollar is presently trading against the Pound in the region of 0.6162 and is trading against the Euro in the region of 0.7611

Euro

The Euro posted declines against several of its main currency rivals over the course of trade yesterday following disappointing EU manufacturing data. The common currency’s decline against the US Dollar was aided by new concerns for America’s economic outlook. One of the main causes of volatility in the Euro today will be this morning’s better-than-expected German unemployment rate data, which could see the currency pare its recent losses. However, developments in the US could also cause movement.

The Euro is presently trading against the Pound in the region of 0.8106 and is trading against the US Dollar in the region of 1.3154

Australian Dollar

After achieving close to a two-week high against the US Dollar the ‘Aussie’ retreated as concerns increase that US lawmakers may struggle with their latest challenge, agreeing on raising America’s debt ceiling. As the risk-taking which followed the US budget agreement abated the Australian Dollar posted losses against the majority of its main competitors. The Australian AiG Performance of Service Index could cause fluctuations in the South Pacific currency later today.

The Australian Dollar is presently trading against the Pound in the region of 0.6471, is trading against the Euro in the region of 0.7982 and is trading against the US Dollar in the region of 1.0500

New Zealand Dollar

Although a new crisis in the US caused the New Zealand Dollar to decline by 0.1 per cent against the ‘Greenback’ losses were tempered by news that the price of whole-milk powder (one of the nation’s major exports) snapped a recent run of declines after rising in the most recent auction. A lack of economic news for New Zealand means that any movement in the ‘Kiwi’ is most likely to result from developments in the US.

The New Zealand Dollar is presently trading against the Pound in the region of 0.5140, is trading against the Euro in the region of 0.6321 and is trading against the US Dollar in the region of 0.8348

Canadian Dollar

Before concerns regarding the US debt ceiling began to gather momentum the Canadian Dollar was able to continue advancing against its American rival, gaining by 0.9 per cent, the most for three months. The ‘Loonie’ also strengthened against several of its other counterparts. The Canadian Dollar may experience movement later today following the release of several key US economic indicators. If the employment change/initial jobless claims data disappoints risk aversion could see the ‘Greenback’ strengthen and the ‘Loonie’ fall.

The Canadian Dollar is presently trading against the Pound in the region of 0.6254, is trading against the Euro in the region of 0.7713 and is trading against the US Dollar in the region of 1.0153

 

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.