The damage has been done by an article that is receiving a lot of attention in the Financial Times which states that Spain, Greece and Ireland are effectively insolvent and that the spreads between German and club Med bonds are back to their widest levels indicating that the markets have stated their opinion on the matter. Data from Scotia Capital shows that net short bets on the euro have increased for a third week in a row suggesting a fall is imminent. For the time being EUR/USD has been catching many out as there has been no direction to speak of for the pair. The fall from $1.31 through to $1.27 recently was meant to be start of a long fall lower for the euro but the move to £1.29 clearly flies in the face of this trading idea. No doubt the longer term suggests EUR/ USD weakness but for the time being we could see some movement in both directions.

US Dollar news:
The U.S dollar is trading in currency no-man’s-land at the moment as the better than expected employment figures reduced the overall fears of a double dip recession as well fears of deflation. Unfortunately this has reduced the demand for the dollar as a safe haven yet at the same time the data is not robust enough to give the dollar any meaningful support. As such this morning sees the Greenback on the back foot as Sterling trades well into the $1.54 range with the possibility of testing $1.55. The euro has also caught some by surprise by trading back to a $1.29 level and registering a 0.64% gain for today. “The figures show that concerns about a double dip had gotten far ahead of the economic cycle. That is encouraging demand for yield and flows into equity markets, which carries a negative correlation with the dollar,” said Lena Komileva, Head of G7 Market Economics at Tullet Prebon in London.

As sentiment improves in the markets the Canadian dollar is trading higher against the U.S dollar this morning. The Loonie has racked up quite a respectable 1.37% gain this morning, elsewhere NZD and AUD are both benefiting through risk on investor attitude as well. A bank holiday in the U.S will see some slightly calmer trading for the U.S dollar and obviously there are no economic data releases for today.

Pound news:
A switch to risk on sees Sterling gain against the dollar but fall against the euro. Currently up 0.56% on USD Sterling is now trading at $1.5485 having slipped to $1.53 last week. This move has been mostly driven by a reduction in concern over a global slowdown but as those fears subside riskier assets start to look more appealing. Unfortunately one such asset that gets a tremendous boost is the euro and as such Sterling has now slipped to €1.1992 on the market. Many would have hoped to see Sterling maintain €1.20 or higher but a -0.11% move lower takes the Pound to €1.19. “A string of upbeat economic data have been allaying fears of a sharp slowing in the global economy,” said Mike Jones, a currency strategist at Bank of New Zealand.

Sterling is also slipping lower against the Australian dollar this morning, for much of last month GBP/AUD had been trading between the broad range of $1.72 and $1.74 however a slip to $1.70 has now translated into a move lower through $1.69 and now $1.6859. If Sterling is to recover against the robust Australian dollar it will take some hugely beneficial data to the upside from the U.K economy. Unfortunately for this is unlikely to happen today as Monday and Tuesday remain relatively quiet on the data front.

Quote of the Day
Money has no conscience – Jimmy Saville

Against the Australian dollar the Pound has failed to break back into the $1.70 level despite trading higher this morning, your current price on the market at $1.6960. “General Sterling performance has been weak,” said Michael Derks, chief strategist at FXPro. On the technical side of things, a slip below the 200 day moving average against the dollar soured any confidence for the Pound. From here trading is likely to be in ranges but a turn to risk off in the markets will see Sterling trend lower.

US Dollar news:
We start this morning walking, or trading, on eggshells as the markets hold off from making any decisive moves ahead of the U.S employment data due at 13:30 London time. Whilst recent data for the U.S has been poor the real issue with the economy is the high rate of unemployment. The impending figure will help traders decide on whether the dollar should fall further. “There is great uncertainty, and the market is acting in a very tentative manner ahead of [Friday's] nonfarm payrolls data,” said Jack Spitz, managing director of foreign exchange, financial markets and derivatives at National Bank in Toronto.

This morning sees a mixed bag for the USD with Sterling edging higher to $1.5420 but the euro held to no change at $1.2819, both these prices reflecting just a 5 pip move from 16:30 yesterday. Ahead of the data release the markets are leaning towards some disappointing numbers, a U.S report forecast that American employers cut jobs last month putting a dampener on investing in U.S assets. Elsewhere the commodity currencies are little changed, AUD and CAD trading lower by -0.24% so far. The move lower by the Canadian dollar marks the end of a 3 day rally, the weaker Loonie retreating on fears weak U.S employment numbers will have a knock on effect in Canada. For the time being CAD/USD is trading at 0.9479.

Euro news:
Traders and investors have been focusing on the USD and GBP for much of this week and, as has happened before, the euro has slowly firmed over the week. Against the Pound the single currency stopped gains at €1.2229 and as we close the week the euro has firmed to €1.2032. Turning our attention to the dollar the euro has climbed back to a $1.2819 after slipping to the low $1.27 level mid week when a slight bout of panic hit the market.

Yesterday saw the ECB come together for a decision on interest rates as well as comments on the economic outlook. As to be expected interest rates were held at an all time low but comments from Trichet suggested that monetary policy will remain “accommodative” for the foreseeable future. This is not actually terribly negative news and the euro was little changed as a result, in fact, growth was revised higher to 1.6% for this year having been forecasted at 0.7-1.3% “Europe is outperforming the U.S. at the moment,” said Adam Carr, a senior economist in Sydney at ICAP. “For the euro, we will see some more strength. For the dollar, I would anticipate modest downside.”

Quote of the Day
“Action may not always bring happiness; but there is no happiness without action.” – Benjamin Disraeli

The Pound had data releases of its own and as a result could not take advantage of initial dollar weakness. Trading yesterday saw Sterling slip to $1.5384 but by 16:30 London time it had recovered to $1.5472. Overnight the Asian markets have not favoured the Pound as a -0.33% fall so far keeps Sterling just above the $1.54 mark. The dollar is likely to be under some sell pressure as risk taking returns to the market, traders will be looking for EUR/USD to break the $1.28 level on improved sentiment.

13:30 London is a key time for US Dollar as unemployment claims are set to be announced, followed by pending home sales. As an overview today’s trading trends are likely to break from expectation as the market waits for labour market figures. Despite the improved manufacturing data the emphasis is still on reducing unemployment.

Pound news:
The Pound was subject to some fairly large intraday moves as data releases then a switch in market sentiment pulled the Pound one way then another. To get things going U.K manufacturing data was disappointing which immediately saw Sterling drop off to the low €1.20 levels and $1.53 against the US dollar. However, as the day progressed market sentiment shifted to the positive and as the equity markets received a boost in afternoon trading so too did the Pound. By 16:30 London time Sterling had recovered to €1.2072 and $1.5472. Unfortunately the recovery late yesterday has not had the momentum to continue this morning and as such Sterling is trading at €1.2034 and now starting to slip against the US dollar, trading 16pips below $1.54 right now.

The Nationwide House Price Index immediately put Sterling on the back foot, released at 07:00 this morning the market was looking for a fall of -0.3% but -0.9% was how it read. For the time being this has kept Sterling trading in the lower end of EUR and US Dollar ranges but against the Australian dollar the Pound has now slipped to AUD $1.6975 having traded within a $1.72/1.74 range for much of last month. With no more macroeconomic news due Sterling is likely to trade within lower ranges with movements driven by market sentiment and equity performance.

Euro news:
The euro took full advantage of the pick-up in market sentiment to trade back into a $1.28 price level as well as pushing Sterling lower. Against the dollar the $1.28 price level was pretty short lived but the current price of $1.2783 is viewed as a comfortable level for EUR/USD for the time being. Elsewhere the bullish tones took the euro higher against both the Swiss Franc and Yen, this in itself an impressive move as CHF and JPY are the flavours of the month for investors who are leaning towards risk off.

13:30 is now the focus for euro traders as the comments from an ECB press conference filter through to the market. Whilst rates are highly likely to remain unchanged it is the outlook on the euro zone that traders are looking for. Comments from various ECB members have often moved the FX markets by some considerable margin and today could be no different. As things stand the market appears to be favouring a risk on stance and a bullish outlook for the euro could hurt the Pound, worst case scenario for GBP/EUR could be a €1.19 price in afternoon trading seeing as we are not all that far away from €1.19 now. Likewise, news to the upside could take the single currency back above $1.28 against the Greenback.

Quote of the Day
“Keep true to the dreams of thy youth.” – Friedrich von Schiller

Turning our attention back to the markets we see that whilst Sterling has clawed back some lost ground it has had no such luck against the Australian dollar. Sterling is down this morning by -0.76% and now trading at $1.7097 having been up above $1.75 last week. This has been driven by data that shows Australian households spent far more than expected while exports improved from an Asian boom. All this translated to Australia’s economy growing at the fastest rate in three years. It makes an interesting comparison to the U.K where the hung parliament situation dragged Sterling lower for so long whereas current figures suggest Australia have marched ahead regardless of their political concerns.

In better news for Sterling an article in the Telegraph highlights that many investment funds have increased their exposure to U.K equities in a bet the U.K recovery is due shortly and will be sustained for the long term.

US Dollar news:
There was some movement in the dollar yesterday but many traders were waiting for some hint of direction from the Federal Reserve Committee. There were no surprises to catch out the currency traders and as such there were no great losses or gains posted for the dollar. Some gains were to be witnessed though, Sterling dropped just over half a cent over the course of the day’s trading. This morning sees the dollar slightly down on Sterling, but despite a 0.23% move higher GBP/USD is still at the $1.5385 level.

Against the euro trading was in tight ranges with the price moving either side of $1.27 with highs and lows of the day falling within a 60pip range. This morning it is as-you-were for the pair as the dollar trades fractionally down at $1.2710. There was not too much data to go on for U.S dollar traders but nevertheless CB consumer confidence data came in better than expected which gave the Greenback some support, all this equated to an afternoon session that saw any substantial moves corrected.

The commodity currencies are stealing a march on the dollar, AUD leading the way with a 1.04% gain this morning. The Canadian dollar is also higher but remains at $0.9407 and towards the bottom of its trading range. Canadian GDP m/m figures were released and came in bang in line with expectations at 0.2% growth. Some had feared the slowdown in the U.S may have crept across the border but these concerns have been quashed for the time being.

Euro news:
The euro is looking slightly stronger this morning as it forces Sterling to retreat back into the €1.20 region whilst at the same time forcing its way back through $1.27. Both these moves come off the back of improved risk sentiment as the equity markets show that investors are now improving their exposure to risk as things begin to settle down ever so slightly.

A rebound of Asian stocks as well as a pick up the commodity sector has seen the euro pick up as investors no longer flood to safe havens. The euro is still close to its all time lows against the Swiss Franc but a 0.48% move higher does suggest the outlook has improved. What has been noted is that given the relative fragility of the euro zone any jitters in the market place have resulted in overdone moves in the FX markets. This is likely to subside somewhat and as such we are likely to see the euro trade around the $1.27 level and within tight ranges. Likewise GBP/EUR is to trade within ranges that have been witnessed over the past month. The pressure still remains with the Pound and as such some traders are targeting a price of €1.18 in the not too distant future. For the time being it would appear that Sterling has enough of a cushion to hold €1.20 at the market.

The euro was relatively calm yesterday as the unemployment rate remained constant for the euro zone in general but Italian retail sales and Italian unemployment improved.

Quote of the Day
“There are three ingredients to the good life; learning, earning, and yearning.” – Christopher Morley

On the data front German unemployment change came in pretty much in line with expectations which is not likely to have a profound effect on the EUR price. Traders were hoping for a rebound to $1.2732 but seeing as this has failed to materialise the market is now looking to the downside of $1.2588.

Against Sterling we are likely to remain in the high €1.2170 region but some positive GBP news could see the euro lose ground and trade back in the €1.22 level. Expected data for the euro and Sterling is likely to keep the pair trading within tight ranges for the time being before one currency takes the lead.

US Dollar news:
Monday saw the markets move towards a risk off stance and as work resumes after the long weekend in England we can see that against the Pound the U.S dollar has pushed higher, the currency pair now trading at $1.5397 and for the time being just bouncing either side of $1.54. The euro is also lower this morning and trading with a $1.2630 price having closed on Friday at $1.2757. Broadly speaking both the Pound and the euro are ending August at the lower end of their trading ranges against the dollar. Friday did see some more positive news for the U.S as preliminary GDP came in at 1.6% when the market was looking for 1.5% however this is not a huge upward revision and did little to move the markets.

Against the commodity currencies the NZD is suffering against the dollar, down -1.07% this morning but AUD and CAD are little changed but trading in the negative so far. The Canadian dollar is under pressure against the U.S dollar as further weak data from Canada underpins the case for a global slowdown.

The news occupying traders this week will no doubt be the performance of the Yen vs USD as the Japanese currency heads for its longest ever winning streak of 1 ½ years. This is of particular concern to the BoJ as a fast rising currency is damaging to their economy. Unfortunately their intervention methods thus far have had little effect as the market buys the Yen (and Swiss Franc) on risk aversion.

Pound news:
Over the course of August Sterling has slipped lower against the dollar but pretty much held firm against the euro. The first trading day of August saw Sterling trading at $1.5936 with many hoping and waiting for $1.60. This never arrived and since those heady days of $1.59 Sterling has slowly slipped lower to now trade at $1.54. There has been nothing hugely detrimental that has seen Sterling drop but in uncertain times the market will favour USD out of the GBP/USD pair.

Against the euro trading has been relatively predictable with prices trading in the high €1.20 levels to low €1.22 levels. The end of the week was more promising as Sterling moved ahead as concerns over euro zone sovereign debt resurfaced. This time last week we were looking at a price of €1.2246 but this morning sees Sterling drop to €1.2178 and -0.23% lower. Last week saw the revised GDP figure revised higher by 0.1% but this did little to GBP/USD as the upward revision of U.S GDP effectively cancelled out the benefits to Sterling.

An overview of the markets show that Sterling is on the back foot as it trades lower this morning. The big winner is the Swiss Franc which has climbed 0.77% this morning as the markets aim for safety first. The Australian dollar has also reversed some losses against the Pound as building approvals and retail sales figures came in better than expected, Sterling now trading at AUD $1.7322 having climbed to $1.75 last week.

Quote of the Day
“Happiness is not having what you want, but wanting what you have” – US Rabbi Hyman Schachtel

At 09:30 we have revised GDP, this is not as crucial as the preliminary GDP figure but as the name suggests there is room for change if the BoE deem necessary. For the time being the revised figure is expected to remain the same at 1.1% growth but no doubt anything either side will cause GBP to move “Most of the pessimism about the pound should have been priced in during the last week or so,” said Ulrich Leuchtmann, head of foreign-currency strategy at Commerzbank AG in Frankfurt. “A surprise on the good side will do more for the pound than one on the bad side.”

Against the dollar there is a slight bit of pessimism creeping into the markets ahead of the data as Sterling slips away from yesterday’s close of $1.5537. Sterling is now trading in the $1.54 region and as U.K markets open Sterling appears to be on the back foot, the pre-open price of $1.5495 immediately losing 10 pips as the bell rang.

This week has been very quiet for U.K macro data, giving rise to Sterling trading within ranges. However, the markets will be looking for MPC comments after the revised GDP figure for clues on the outlook for Sterling.

US Dollar news:
The end of the week sees a calm morning trading session ahead of some important data due for both the dollar and Sterling. Many USD traders will be waiting on the sidelines before preliminary GDP due at 13:30 London time. This will then be followed by comments from Federal Reserve Chairman Ben Bernanke. Even if the data comes out in-line with expectations Mr Bernanke still has the ability to move the markets on his outlook for the U.S. For the moment the sentiment is to the downside, “A string of poor U.S. data suggests “a deepening risk that the U.S. is entering into a significant slump, more direct efforts at re-flating the U.S. economy will likely put downward pressure on the (dollar) according to Steven Englander, head of G10 strategy at Citigroup (C) in New York.

For the time being the dollar has just edged ahead on both the euro and Sterling but the gains are almost negligible, Sterling dipping to $1.5495 and the euro trading lower for the day by 0.09% but just two pips above $1.27 and unchanged from a price of $1.2702 at 16:30 yesterday. The commodity currencies are also little changed overnight, with the Canadian Dollar trading in the mid $0.94 levels for the time being. U.S unemployment claims came in lower than expected giving the U.S dollar some breathing room but this did little to give the dollar any meaningful support. Expect some USD volatility around 13:30 then at 14:30 London time as U.S market open for today.

Euro news:
Much focus has centred on the U.S this week and as such the euro has edged higher to $1.27 without too much fanfare. The beginning of the week saw $1.26 maintained but yesterday the single currency pushed through $1.27 and finally came to a rest at $1.2702 at 16:30. This morning sees relatively thin trading but a quick look at the euro performance and after bouncing either side of $1.27 it has now caught a slight tail wind to move to $1.2730. This price will be dollar driven so EUR/USD is very much subject to U.S GDP figures.

Elsewhere the euro claws back some lost ground against the Pound. Much of the week saw Sterling in the low €1.22 levels but the single currency has reversed these earlier slips to push the price back to the high €1.21 region. A broad look at the market reveals little direction for the euro as we end the week. Trading is very much mixed and thus far losses/gains have been contained to expected intraday trading levels.

We will have to wait and see if the furore over Club Med debt resurfaces, after the commotion caused last time round the markets maybe more conservative in their reactions, after all many were convinced that a default was on the cards but so far all are still present and correct in the euro zone. In other news F1 is back, after a mid season break we are back at Spa and the famous Eau Rouge corner.

Quote of the Day
‘However beautiful the strategy, you should occasionally look at the results.’ – Sir Winston Churchill

The general downbeat theme is most evident in EUR/CHF (Euro / Swiss Franc) as the single currency drops to its lowest ever price against the Swiss Franc, reaching 1.2987. Speculation that the German business confidence probably fell for the first time in three months added more down beat news to the already shaky confidence surrounding the euro zone.

US Dollar news:
The U.S dollar started well yesterday as general risk off sentiment saw the dollar edge ahead, Sterling was the big loser as it dipped to $1.5393 on a downward momentum move. The euro also slipped lower as fears over an Irish and Spanish downgrade put the market on alert. However, GBP and EUR as well as a number of other currencies reversed their fortunes against the dollar and moved ahead after U.S housing data came out. Looking for a figure of 4.68M existing homes sales, the actual number was pretty dire at 3.83M. This gave the dollar a serious knock back for afternoon trading and Sterling managed to claw back some lost ground to reach $1.5453.

The commodity currencies also had a choppy day as initial heavy losses of over 1% were pared back. The morning session saw the Canadian dollar dip to $0.9381 but overnight it has recovered to $0.9420 on the market but thin trading sees the percentage change at 0.01% thus far. Generally speaking the end of autumn is quiet for trading and this morning appears to be in-line with this trend as volumes have kept GBP and EUR moves to within 0.20%. Naturally this is subject to change come 13:30 when we have core durable goods orders and new homes sales data.

Warning** Existing Home Sales Plunge 27.2%: Housing Tsunami Collapse Coming!

Pound news:
The pretty severe moves lower yesterday have been corrected to some extent this morning but nevertheless the dovish comments by various members of the MPC as well as the acceptance that we are heading towards a double dip recession sees Sterling on a steady course lower. Trading against the euro now appears to be in the €1.21 range despite an afternoon recovery to €1.2216 yesterday. The price on the market stands at 1.2163 which reflects a 0.20% move lower against the single currency.

The pressure really is on Sterling now as various think tanks and economists are concerned over the effects of the budget cuts in terms of growth. A recent article on Bloomberg suggests that the tax cuts will actually do more damage to the poor rather than deliver fairness across the board. Whilst budget cut worries rage on in the U.K any chance of gains against the USD will be put on hold. Despite weak U.S data traders and investors are more likely to favour the Greenback in times of turmoil.

This morning sees a disappointing drop to $1.5395 on the market, hopefully a hold of $1.54 can be achieved but nevertheless those hoping for $1.60 maybe waiting for some time. No macroeconomic data for today or this week so far opens the door to GBP falls as there is nothing to give rise to a rally in Sterling.

Quote of the Day
“Do it big or stay in bed.” – Larry Kelly

GBP/EUR is not looking much better as the -0.52% price correction sees Sterling fall from the €1.22 level as seen yesterday to now trade at €1.2191. The fall lower by Sterling in the FX markets will have been driven by MPC member Dr Martin Weale who said Britain faces a “significant” risk of a double dip recession. There is very little in terms of macroeconomic data to support Sterling so these MPC comments will no doubt put serious pressure on selling Sterling.

Against the Australian dollar GBP slips back to $1.7382 but with Australia having parliamentary problems of their own the fall is has been confined to -0.09% so far.

US Dollar news:
This morning sees the dollar broadly stronger as the markets still decide on whether to completely move out of riskier assets and back into the Greenback. A snap-shot of the markets reveals that the bias is definitely towards buying the dollar as it takes the upper hand against the euro as the single currency trades lower to $1.2644 and some 20 pips lower than 16:30 yesterday.

Against Sterling the move is much more pronounced as the dollar climbs by 0.70% forcing the price down to $1.5397, this is quite a fall from yesterdays close of $1.5510. As to be expected when the market turns risk off the commodity currencies are suffering against the U.S dollar, NZD, AUD and CAD all lower by at least half a percent. Of course this move higher from USD will be exaggerated by the hung parliament affecting the Australian dollar and the revised outlook for Canada.

The Canadian dollar dropping to its lowest price in a month as its main export, oil, falls and the Bank of Canada reviewed its interest rate decision on the back of slowing growth. Yesterday was a very quiet day on the macroeconomic front so trading was fairly thin.

Today sees a little more action as New Zealand produced its inflation expectations (2.6%), Canada provides core retails sales at 13:30 London time and in the U.S we have existing homes sales at 15:00 London time.

Euro news:
The euro is mixed this morning as a fear of a global slowdown affects each country thus producing a mixed bag. Against Sterling the euro is actually trading higher as the downbeat comments from the MPC take precedence for GBP/EUR. However, as Ron Leven, currency strategist at Morgan Stanley in New York points out “”The euro is the most vulnerable to a slowdown, southern European countries that are going through all these somersaults trying to get their deficits down…won’t get the tax revenues they were expecting.” As the bias leans towards selling the euro, the current price of $1.2615 suggests that the single currency may fall to $1.25 in todays trading.

Elsewhere the euro has dropped further against the yen but, for the moment, held firm against the Swiss Franc. I fear that the euro will be subject to further falls as this global downturn comes along. For the time being positive corporate earnings are keeping a modicum of risk appetite in the markets. There was some data yesterday by way of French and German manufacturing and services PMI but this was not considered to be of ground breaking importance and the results were pretty much in-line with expectations.

Quote of the Day
“Never desert your own line of talent. Be what nature intended you for, and you will succeed.” – Sydney Smith

Against the U.S dollar today’s move higher simply keeps GBP trading at $1.55, hopefully we can maintain this level and not slip to $1.49 levels witnessed a few months ago. Unfortunately the Pound is under threat as traders take a bearish stance as growth falls on the back of budget cuts. TD Securities predicts sterling will end the year at $1.32. BNP Paribas, based in Paris, estimates the pound may slide to $1.40, while Zurich-based UBS AG, ranked by Euromoney Institutional Investor Plc as the world’s second biggest foreign exchange trader, forecasts a drop to $1.35.

Turning our attention to GBP/EUR the picture looks better as this morning Sterling climbs to €1.2271, moving ahead by 0.47%. The 52 week high comes in at €1.2391 so current levels are looking favourable for GBP/EUR traders. Of course with the EU and U.K looking shaky in terms of economic health this price will fluctuate depending on which economy suffers the greatest upon the arrival of a global slowdown.

Elsewhere, Sterling is now trading at Australian Dollar $1.7474 and up over half a percent as the Aussie dollar slips on a hung parliament, the first in Australia for 70 years. What comes around goes around….

US Dollar:
As we head into the final week of the month we can see through dollar prices that the underlying tone for the markets is risk off. This is not an obvious deduction but nevertheless the dollar and other safe haven currencies are looking firmer as August draws to a close.

After negative comments from Axel Weber the euro plunged -1.03% on Friday and the start of this week shows the single currency has not recovered with a price of $1.2720 and trading either side of unchanged on the market.

Sterling is faring better as the change for the day reads 0.39% to the good, however this is just half the picture as Sterling has weakened significantly recently and the current price on the market, $1.5595, has not been seen since July. The FX markets are usually a good indicator of economic health for given regions but things of late have been slightly skewed. A recent run of better than expected corporate figures have lifted equities and inspired risk confidence, however, a global slowdown is lurking around the corner and fears over sovereign debt are now at the forefront of investor’s minds. “Concerns are increasing about the global economy,” said Kazuya Yashiro, currency analyst at Himawari Securities, Inc. in Tokyo. “The uncertain outlook causes the yen to be bought.” The yen being one of three preferred safe haven currencies, the U.S dollar and Swiss Franc the others.

This morning sees little movement in the commodity currencies, although Australian Dollar is suffering as a result of a hung parliament, something Sterling traders will know well.

Euro news:
The euro is now under increasing sell pressure as investors start to analyse their positions in anticipation of a global contraction of growth. As it is government bonds yields are falling as more traders buy government paper in a move to sure up their portfolios. The euro had started at the $1.27 level but was hovering just above $1.26 but as the markets now open the single currency has taken a dip to $1.2690. Trading has been relatively calm so we will have to wait and see if this is just an intraday move lower or the start of a longer term slide.

Trading against Sterling had been confined to ranges but the start of the week sees the euro giving up ground, weakening into the mid €1.22 range. Whether or not this is a sign of further weakness is not so clear cut as aforementioned restrictions to growth in the U.K are likely to keep GBP/EUR in check. The euro is also down against the Yen but this should not be of huge surprise as the euro, compared to the Yen is as risky as things come. “We’re back to tension in the euro-zone and uncertainty about the global economy,” said Neil Mellor, a currency strategist at Bank of New York Mellon Corp. in London. “In this environment we’re likely to see a stronger yen and Swiss Franc.”

Quote of the Day
“No matter how far you have gone on a wrong road, turn back.” – Turkish proverb

Against the euro trading has been confined to even tighter ranges. A dip to $1.27 and rally to $1.29 had been witnessed but these were intraday moves, EUR/ USD trading very much at the $1.28 level with $1.2825 the current market price and the pair moving just 0.02% for the day so far. The end of the week is always slightly calmer as traders plan strategies for the following week. Generally speaking the dollar is mixed this morning but trading is on the thin side as a slight risk off bias filters through. AUD and NZD are down against the Greenback but by small margins and the Canadian dollar moves either side of unchanged now trading at $0.9611 having pushed into $0.97 levels earlier in the week. If the US dollar was not seen as a safe haven then the poor unemployment claims and very poor manufacturing sentiment would have sent the Greenback tumbling, however, as it is the weak data simply confirmed worse is likely to come giving investors no reason to sell the US dollar for anything riskier.

Pound news:
Sterling fell by some margin as traders thought further QE was in the pipeline, when this was proved not to be the case Sterling rallied well. Unfortunately the rally was nothing more than a knee jerk reaction and by afternoon trading the Pound had lost most of its momentum. The end result of all this was Sterling remained pretty much within the ranges seen all week. Yesterday saw Sterling touch €1.2200 but this was very brief and served as the high of the day.

Despite retail sales coming in at a 1.1% growth versus 0.4% forecasted this better than expected news simply supported Sterling to hold €1.21 and $1.55 rather than provide momentum for any further gains. This morning reveals Sterling is trending lower against its major pairs but the moves are confined to -0.38% or better, Sterling losing the most ground this morning to the Swiss Franc. Against the dollar Sterling has gradually slipped lower over the course of the week. We have held a $1.55 level but within that the Pound has moved from $1.5589 to a low of $1.5527. This morning sees a slight recovery to $1.5569 but Sterling remains under pressure as the outlook for the U.K economy remains bleak.

Against the Australian dollar Sterling has pushed back to the firmer end of the trading range, AUD $1.7472 the price to buy. Again, trading has been fairly volatile for this pair but has kept within a $1.72 to $1.74 range.

Euro news:
The euro is holding on to respectable levels against Sterling and the dollar but the question is how long before the single currency starts to lose ground as fears over Greece kick off again. Already EUR/USD is well off the $1.31 levels seen at the beginning of the month and the sell pressure on the euro is taking it towards a $1.27 price.

Sterling is slower to register gains against the single currency, but the bias is leaning towards selling the euro for Sterling as we experience déjà vu regarding Greece. The fact that Greece was given its last rights then suddenly staged a miraculous recovery was a bit too convenient for some. The problems were never going to go away that easily due the severe nature the Greek economy was in. This is now becoming increasingly evident as the austerity measures have caused untold amounts of damage to every aspect of the Greek economy. No doubt we are going to witness the resurfacing of euro zone default discussions as the situation worsens substantially before there are any signs of improvement.

Quote of the Day
‘There is only one success – to be able to spend your life in your own way.’ – Christopher Morley