Sterling steadied against the euro at the end of a turbulent week for the UK economy and sterling’s prospects. Shocking GDP figures on Tuesday drastically altered market expectations for an interest rate hike by the Bank of England as the data showed that the economy contracted by 0.5% in the last 3 months of 2010. However, Wednesday’s Bank of England minutes showed that another member of the committee voted for a 0.25% interest rate hike which saw market anticipation for an interest rate hike creep back in. Prospects for a UK recovery were dented further on Friday when a survey showed that consumer confidence dropped to the lowest level in 22 months as the VAT rise and spending cuts loomed. This week sees important house price and manufacturing data so call in now for a live exchange rate.

In the euro zone, the euro slipped by 1% against the Japanese yen and the Swiss franc as risk aversion boosted demand for the traditionally safe haven currencies of Japan and Switzerland. The developing situation in Egypt left investors concerned over the general situation in North Africa and the Middle East. With Egypt seen as a pivot point for stability in the region, financial markets will keep a very close eye on things. This week sees a wide array of data including the European Central Bank’s interest rate decision and press conference.

In the USA, the US dollar had a bumper day on Friday as GDP data showed that the economy gathered pace in the last quarter of 2010. In addition, the situation in Egypt saw safe haven buying of the US currency after oil prices jumped due to concerns over future supply in the event of unrest in the Middle East. This week sees a wide array of data including the important Non-Farm payroll figures, so call in now for a live exchange rate.

Elsewhere, the Japanese yen performed well as strong economic data helped boost the currency. Industrial production data showed a 3% gain on the previous month while Australian inflation slowed in January to a four month low. It is set to be an interesting week on the risk appetite front so call in now for a live exchange rate.

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Sterling gained against the US dollar yesterday as the currency continued to gain support following Wednesday’s Bank of England minutes, hitting a daily high of $1.5991/£1 – just shy of the $1.60/£1 mark. Sterling’s support came from the fact that committee member Martin Weale joined Andrew Sentance in calling for a 0.25% rate hike – a move that was seen as increasing the likelihood of an interest rate rise later this year, despite Tuesday’s poor GDP figures. Mervyn King made it clear in a speech on Tuesday night that any rate decision would have the long term prospects of the economy at heart. King’s speech (not the Colin Firth one) reaffirmed his belief that inflation would rise before dropping next year. Call in now to take advantage of the higher US dollar rates.

In the euro zone, high inflation and potential interest rate hikes seemed all the rage this week – yesterday saw Germany join the party with prices rising in the country at their highest rate since October 2008, up 2% year on year. This prompted further speculation over interest rate hikes with many analysts expecting a 0.5% increase by the end of the year. Out today there is no real data of interest but call in to speak to the team about the next few weeks.

In the USA, the US dollar fell yesterday as the impact of President Obama’s State of the Union address sank in. The President announced the first moves to start cutting spending and the deficit. On the data front, numbers for first time claimants of unemployment benefits gained that did not help. Released today is the 4th Quarter GDP figures which could be very interesting – call in now for a quote.

Elsewhere, the Japanese yen fell yesterday after credit rating agency Fitch cut the country’s credit rating to AA-. The move called into question the yen’s status as a safe haven currency and many feel that this could benefit the US dollar in the long run.

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Sterling staged a muted recovery yesterday following Tuesday’s shock GDP figures, finishing the day up 0.55% against the euro and 0.3% against the US dollar. Sterling saw the recovery after the Bank of England minutes showed that another member of the committee had unexpectedly joined Andrew Sentance in calling for a 0.25% rate hike, which left some feeling that there is a likelihood of an interest rate hike later this year. MPC member Martin Weale has so far stayed on the fence, but the stubbornly high inflation caused him to side with rate hawk Sentance. In reality the likelihood of an interest rate hike in the next 6-12 months is minimal with many analysts still reeling from Tuesday’s shocking announcement. In a speech on Tuesday night, Mervyn King stood by his assessment that inflation will peak at around 5% before tailing off next year. Until the fundamental figures pick up, sterling is going to be in a holding pattern for the considerable future. Check out Smart Currency’s Nick Ryder in yesterday’s Guardian here.

In the euro zone, the euro hit a 2 month high against the US dollar as investors speculated that interest rates in the euro zone would rise sooner than in the USA. With the European Central Bank concerned about rising levels of inflation and the Federal Reserve set to keep monetary policy relatively loose for the time being gave rise to speculation that the euro holdings would yield more in the coming months as the ECB looked to control inflation with interest rate hikes. With the current situation in the region, any rise in interest rates would be nigh on suicidal for the likes of Portugal and Greece, so don’t expect this for a while. Call in now for a live exchange rate.

In the USA, the US dollar fell yesterday following President Obama’s State of the Union address in which the President promised spending cuts. The move to trim the deficit was seen positively by the markets and it left markets expecting loose monetary policy for the months to come in order to accommodate the cuts. The Federal Reserve met last night and made no changes to monetary policy, giving investors more certainty as to the future in contrast with the UK – this will help stabilise price volatility. Call in now for a live exchange rate.

Elsewhere, the Australian dollar suffered as Prime Minister Julie Gillard unveiled a tax to pay for flood repair – the PM estimated that the damage will cost AU$5.6bn and cut economic growth by 0.5% next year, although analysts feel that estimate could be a little conservative. Japan’s credit rating was slashed this morning over concerns that not enough was being done to cut the deficit.

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Sterling plummeted yesterday – dropping by 1.3% against the US dollar and 1.1% against the euro – as 4th Quarter GDP showed that the UK economy contracted by 0.5% in the last 3 months of 2010. Markets were expecting December’s poor weather to have an impact with analysts expecting a 0.5% gain, but the figure came as a great shock as there no longer seems to be any justification for last week’s talk of higher interest rates before the summer. Sterling is likely to maintain subdued now for the coming months until the fundamental data catches up with inflation – especially after Mervyn King essentially ruled out any interest hikes for some time after insisting that inflation would retreat after peaking at 5% later this year. On the plus side, we have seen a lot of clients moving sums back into sterling taking advantage of sterling’s demise.

In the euro zone, the euro rapidly jumped to a 2 ½ month high against sterling as the shock UK GDP contraction came through. The euro hit €1.1562/£1 – the highest level since November the 8th – as markets scaled back their expectations of an interest rate rise in the UK that had buoyed the pound last week. Aside from the euro’s movement against sterling, French consumer spending beat expectations, and the currency hardly moved against the US dollar all day as the majority of traders focused on sterling. Out today, we minimal data and Europe is likely to be overshadowed by UK and US interest rate minutes and policy announcements. Call in now for a live exchange rate.

In the USA, the US dollar had a similarly strong day against sterling – gaining by nearly 2 cents against the nose-diving UK currency. Traders took advantage as sterling posted 1% losses across the board. The US dollar also took a boost from better than expected consumer confidence figures that added to the ever improving picture of a blossoming US recovery. Out later today, we have the Federal Reserve’s interest rate decision and policy statement. Markets are not expecting any changes, but subtle changes in the language used can be seen as a change in direction – either way it is a big day again, so call in now to ensure you don’t lose out.

Elsewhere, the Reserve Bank of India raised interest rates by 0.25% to clamp down on spiralling inflation and issued a warning that food prices would continue to rise without measures being taken to boost supplies and ease price pressures. Call in now for a live exchange rate.

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Sterling fell against the US dollar and euro yesterday as investors took profits following last week’s highs. Last week was a bumper week for the pound as inflation figures heightened expectations of an earlier than expected interest rate hike by the Bank of England. However, negative comments from Adam Posen on Friday and a downbeat article in the Daily Telegraph cast doubts over the possibility of any change in monetary policy. The Telegraph argued that any interest rate hike could punish the economy and push the recovery into a period of stagflation. Today sees the first estimate of UK GDP for the 4th Quarter and analysts are expecting the harsh weather to have dented economic activity. This week also sees the Bank of England’s minutes from their last meeting so call in for a live exchange rate.

In the euro zone, the euro fell from a 2 month high against the US dollar as worries over political instability in Ireland dented the outlook for the region. The euro hit the highest level against the US dollar since November on Sunday as talk over inflation in the region helped the currency hit $1.3648/1 but that was soon lost as worries over the stability of Ireland’s bailout plan caused the currency to drop. Monthly industrial orders slipped in the region also – out today there is German consumer confidence data so call in now for a live exchange rate.

In the USA, it was a quiet day for data in the region and the US dollar took its lead from other currencies. It is an interesting week ahead, with President Barack Obama’s State of the Union address tonight and the Federal Reserve’s interest rate decision tomorrow. Ensure you speak to one of the team to avoid the market moving against you.

Elsewhere, the Canadian dollar fell against the majority of counterparts following an announcement to increase oil production by Saudi Arabian Oil minister Ali al-Naimi that saw the price of crude oil drop. Canada kept interest rates on hold last week given the Canadian dollar’s strength and any further rate rises will be ‘carefully considered’.

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Sterling finished slightly stronger against the US dollar on Friday after following the euro higher against the US currency. It was a volatile week for sterling after much higher than expected interest rates heightened expectations for a sooner than anticipated hike in UK interest rates. This saw sterling hit a high of $1.6060/£1, however a poor set of fundamental figures – including a 0.8% drop in retail sales for December on Friday – saw the sheen taken off analyst’s expectations for an interest rate rise. Retail sales were expected to fall as a result of December’s inclement weather, but not by as much as they did. It is a very important week for sterling, with preliminary GDP for the 4th Quarter of last year and the minutes from the most recent Bank of England meeting. The minutes will be very closely watched for any sign of a change in monetary policy so call in now for a live exchange rate.

In the euro zone, the euro hit a 2 month high against the US dollar – breaking above the $1.36/€1 level – as market anxiety over the euro zone debt crisis started to ease. Strong debt auctions from Portugal and Spain and warnings over higher inflation in the region have helped to reduce panic over a systemic collapse. However, Sunday’s events in Ireland could yet test this. Ireland’s Green party withdrew from the coalition government to end a weekend that saw Prime Minister Brian Cowen step down from his party’s leadership but stay on until key budget legislation is passed that was a key requirement of the recent EU bailout. The move by the greens paves the way for a March 11 election – we shall have to see how this pans out for the euro this week.

In the USA, it was a good week for data with the claimant count dropping and new home sales jumping unexpectedly. Fundamental figures have been improving, but the Federal Reserve is not expected to make any changes to current monetary policy. The Fed meets this week, and is expected to continue with its plan to buy $600bn of debt through until mid-2011. Aside from that, there is a wide array of data released this week so ensure you don’t lose out and speak to a trader now.

Elsewhere, the USA has seen some progress from China to allow the value of its currency to appreciate. China has come under pressure as the Chinese reminbi has been kept artificially low against the US dollar, giving Chinese exporters an unfair advantage. Apparently Chinese Premier Hu Jintao offered no new concessions on currency on his visit to the USA last week.

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Sterling has struggled yesterday as a survey by the Confederation of British Industry unexpectedly showed that orders dropped in January. Wednesday’s unemployment figures showed that 2.5m people are out of work (the highest since last spring) and the number of 16-24 yr olds out of work is at a record high of 951,000. The CBI data and less than rosy employment figures contrast with Tuesday’s higher than expected inflation figures and adds to the dilemma that the Bank of England faces regarding monetary policy. Inflation is stubbornly high and any interest rate hikes to curb this could stifle the economic recovery. Sterling will be held back if unemployment and other fundamental figures continue to disappoint. Either way, I don’t think we will see any change from the BoE on interest rates or monetary policy until Q3 at the earliest. Out today, we have key retail sales data and mortgage approval figures – both of which could further dent the fundamental outlook for the UK so call in now for a live exchange rate.

In the euro zone, the euro strengthened by 0.5% against sterling after large ‘real money’ (i.e. non speculative) buying saw a significant market movement. Spain also came close to finalising plans for a second round of recapitalisation for the country’s troubled banks. This helped yields on Spanish bonds fall, essentially giving the country access to better borrowing rates. It is a quiet day for data releases, but the debt crisis remains top of the agenda for the markets – ensure you don’t lose out and speak to a member of the team sooner rather than later.

In the USA, the US dollar had a good day, gaining broadly as a wide array of data showed that the US recovery is firmly under way. Existing home sales showed nearly 500,000 more than expected and unemployment claims dropped by 40,000 on last month. The biggest concerns for the US recovery are house sales and employment, so these figures were a welcome change to previous months. It is quiet today, but there is still scope for significant movement.

Elsewhere, the commodity backed currencies (Australian, Canadian and NZ dollar, South African rand) suffered yesterday as China’s 9.8% quarterly GDP sparked rumours that the country would look to calm the economy down. This would impact demand for commodities and as such saw the currencies drop.

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Sterling slipped yesterday against the euro and US dollar dropping from the highs seen on Tuesday after UK inflation came in much higher than expected. Jobless claims dropped by 4,100 in December against an expected rise of 1,500 but analysts were very weary of a poor labour market in the next few months as public sector job cuts are set to take effect. Despite dropping below $1.60/£1, sterling remained up 0.1% on the day against the US dollar but fell 0.6% against the euro as the single currency got a boost from expectations that European officials will be able to navigate through the debt crisis and find a more long term solution. Sterling is likely to remain well supported against the major currencies after much higher than expected inflation figures on Tuesday – out today we have industrial order expectations, so get in touch now for a live exchange rate.

In the euro zone, the euro had a strong day yesterday and hit a two-month high against the US dollar overnight on expectations that policymakers in the region would put a more long term plan in place to solve the debt crisis. In addition, rumours that banks in Asia would look to hold euros also helped boost the euro. There has been a spate of ‘short covering’ where investors who were hoping to profit from a falling euro have bought back the currency – again, boosting the strength. Today, there is European consumer confidence data and we have already seen German PPI data come in better than expected.

In the USA, the US dollar held relatively steady following Tuesday’s broad fall against other currencies. However, disappointing earnings figures from Investment Bank Goldman Sachs and poor housing data did not help the US currency. Global risk appetite was given a boost as sentiment over a long term European solution improved – this saw the US dollar hit a 2-week low against the Swiss franc. Out today, there is home sales and manufacturing figures so call in for a live exchange rate.

Elsewhere, China’s GDP grew from 9.3% to 9.8% on the quarter and inflation came in slightly lower than expected. The lower inflation was good for the Australian dollar, as it means that China is unlikely to look at tightening monetary policy yet and as such export demand from Australia should remain high.

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Sterling surged to an 8 week high of $1.6060/£1 against the US dollar and came within touching distance of €1.20/£1 yesterday after December’s Consumer Price Inflation (CPI) data came in much higher than was initially expected. Higher oil prices drove CPI to an 8-month high of 3.7% analysts expecting around 3.3%. This yet again boosted calls for an interest rate hike and as such saw sterling strengthen across the board as financial markets anticipated moves to tighten monetary policy as early as May. The Bank of England is walking a very thin line and is anxious to avoid stifling the fragile growth we are seeing with interest rate hikes. Financial markets can get a little carried away at the first sign of big shifts in policy, and as such it is important to recognise that the Bank of England will take some time to decide on the next steps. The next major focus is on the minutes from last week’s meeting – released next week. It will give a key insight into the current thoughts of the policymakers, so call in now for a live exchange rate.

In the euro zone, the euro continued to post large gains against the US dollar after a huge jump in economic sentiment data from last month’s reading. The German ZEW economic sentiment indicator gives an idea of confidence in the region and it shot up from 4.3 to 15.4 and as a result saw the euro hit a daily high of $1.3465/€1. Heavy buying of euros by accounts in the Middle East and rumours that Russia was considering buying Spanish bonds again also helped boost the currency, but it failed to capitalise after European finance ministers agreed to delay strengthening the region’s rescue fund. Out today, there is current account data for the region, so call in now for a live exchange rate as there is a lot of volatility.

In the USA, the US dollar was on the back foot today – falling by over 1% against both the euro and sterling at points, before recovering towards the end of the day. Data was pretty thin on the ground as the currency took it’s momentum from UK and European events. However, there was some manufacturing data that showed a slight deterioration on last month. Be aware that volatility is back, so make sure you are in constant contact to take advantage and avoid losing out.

Elsewhere, continuing this week’s focus on the joint Chinese/ US Presidential summit and currency discussions over China’s artificially weak exchange rate, White House spokesman Robert Gibbs was yesterday quoted by Reuters as saying that “More must be done [to allow the Chinese yuan to strengthen]. That is an opinion that is held, not just by this country, but by many countries around the world”. It seems that the US is beginning to tighten the pressure on Chinese President Hu Jintao, so keep an eye on things this week as it could get interesting.

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Sterling jumped to an 8 week high against the US dollar and moved up against the euro after speculation that the Bank of England could raise interest rates as early as May. Sterling hit $1.5953/£1 and €1.1974/£1 as traders speculated that tomorrow’s Consumer Price Inflation could show inflation close to 4% - 2% above the Bank of England’s target level. The dilemma being faced by policy makers is that any interest rate hike could dent the UK’s fragile recovery – especially as the recent VAT hike and cuts have yet to take full effect. A higher than expected CPI figure is likely to see further sterling strength later today so ensure you call in now for a live exchange rate.

In the euro zone, the euro fell broadly yesterday after investors reassessed ECB President Jean-Claude Trichet’s call for interest rate rises last week and also saw that no ‘quick-fix’ was to be put in place for the euro zone’s bail out fund. The majority of finance ministers in the region today called for an increase in the lending capacity of the emergency fund to €700bn, but Germany was reluctant to push through urgent changes citing a calmer bond market and an aim to discuss ‘anti-crisis measures’ in more depth in March. Germany clearly does not want to increase the rescue fund, and as such sentiment towards the single currency slipped. Out today, there are economic sentiment figures for the region, so call in now for a live exchange rate.

Trading conditions were pretty thin in the USA with a public holiday, but off the back of euro weakness, the US dollar was up 0.65% against the euro but dipped against sterling on interest rate expectations. It did not see much reaction to comments from top Federal Reserve official Charles Plosser who did not rule out an interest rate rise in 2011 – it seems everyone wants to jump on the interest rate hike bandwagon. Out today, we have some manufacturing data and figures on foreign investment into the USA, so call in now for a live exchange rate.

Elsewhere, on the eve of Chinese President Hu Jintao’s visit to the USA for a summit with President Obama, a group of senators are looking to re-introduce a bill to combat China’s currency policies. Senator Charles Schumer said that the artificially low exchange rate was like a “boot on the throat” to the US economic recovery as it gave Chinese exporters an unfair advantage over their US counterparts by artificially keeping the goods cheaper internationally.

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Sterling had a strong finish to the week, closing at a 1 month high against the US dollar after speculation over a UK interest rate hike helped boost the pound. Higher than expected producer prices, that came in at 4.2% against an expected 3.9%, gave further reason for investors to expect an interest rate hike from the Bank of England sooner rather than later as inflation remains stubbornly high. Sterling also strengthened against the euro despite speculation that the European Central Bank might also need to raise interest rates sooner rather than later. However, given the current situation in the euro zone, talk of interest rate rises seems a little premature. This week sees some key data releases – inflation on Tuesday, unemployment on Wednesday and ‘official’ retail sales data on Friday. Call in now for a live exchange rate.

In the euro zone, it seemed the region breathed a sigh of relief at the close of a turbulent week for the euro. Successful bond auctions from Portugal and Spain saw the euro strengthen by 3.8% against the US dollar on the week – the best performance for 1 ½ years – as fears eased over the credit crisis in the region. Many analysts starting getting a little euphoric and talking about a euro rally towards $1.50/€1, but there are some serious issues in the region that cannot be fixed by 1 or 2 successful bond auctions. A meeting of EU finance ministers kicks off today, with many sceptical that a quick fix to the situation will be found. Watch this space, as a minor spark could see somebody heading to the EU and IMF for a bailout again…

In the USA, it is set to be an interesting week ahead. Chinese President Hu Jintao is set to meet Barack Obama for a summit in Washington this week. The discussions are almost guaranteed to revolve around currency and global trade. China has come under pressure from the USA in recent months over the pegged exchange rate that has kept China’s exports artificially cheap – clearly US manufacturers have been getting a little ‘hot under the collar’, so the discussions should be interesting.

Elsewhere, with floodwaters still causing havoc, Australian inflation slowed to3.8% in December according to an estimate by TD securities and New Vehicle Sales fell by 3.1% in the month too. There is potential for a sterling recovery against the Aussie dollar so get in touch now for a live exchange rate.

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Sterling fell against a stronger euro yesterday, but hit a 1 month high against the US dollar helped by speculation that UK interest rates may rise sooner than expected and following weaker than expected US data. With the Bank of England keeping interest rates on hold at record lows of 0.5%, many feel that consistently high inflation will pressure the central bank to raise interest rates later this year. The minutes from yesterday’s meeting are due on January 26th and will be watched very closely for any sign of the Committee’s intent. Sterling fell against the euro after a strong Spanish bond auction and positive comments from ECB President Jean-Claude Trichet sparked investors to cover short positions by buying back euros that had been sold. Manufacturing data beat expectations, coming in at 0.6% against an expectation of 0.5%. In terms of data, there is key producer price inflation today which will give interesting insight into inflation for the rest of the year.

In the euro zone, the euro jumped 1% against the US dollar and sterling as ECB President Jean-Claude Trichet issued a warning about short term inflationary pressures in the region. A Spanish bond auction went far better than expected and helped ease concerns that Spain would join Ireland, Greece and possibly Portugal in the bail out club. Today there is European inflation data for the year so call in now for a live exchange rate.

In the USA, poor US data helped see the euro strengthen by 1% against the US dollar. Figures showed 445,000 new claimants for unemployment insurance against an expectation of 400,000. In addition, food and energy costs saw producer prices rise and indicated fresh headwinds for an economy that had started to show signs of a fresh recovery. However, a rise in exports helped reduce the US trade deficit in November. Out today we have consumer price inflation and retail sales figures, so speak to a trader for a price.

Elsewhere, an emergency meeting of Swiss trades union and industry representatives triggered heavy selling of the Swiss franc and saw it drop to the lowest level since mid-December. Have a great weekend

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Sterling strengthened to near a 1-month high against the US dollar yesterday following strong buying by Asian sovereign accounts. This helped offset an earlier drop caused by poor UK data. Figures released showed that the UK trade deficit widened to £8.736bn in November - £0.4bn more than expected and the highest trade deficit since records began in 1980. The data saw sterling drop marginally against the euro and US dollar but it was well supported by large purchases of sterling from Asia and Russia. Tomorrow is a busy day for data; with manufacturing production figures and the first Bank of England interest rate decision of the New Year. Policy is not expected to change, but investors will keep a close eye on the minutes of the meting hen they are released in 2 weeks time.

In the euro zone, the euro posted gains against the US dollar and sterling after a key Portuguese bond auction went slightly better than expected and news emerged that many investors believe the European Union will add further funds to the emergency bailout fund. Whilst the euro performed well, it was simply a reaction to the auction not being as bad as expected – specifically the yield that Portuguese government needs to pay on the debt, which came in at 6.7% against an expectation of above 7%. The upshot is that the crisis is by no means over. Today sees the ECB interest rate and press conference, so call in now for a live exchange rate.

In the USA, the Federal Reserve’s ‘Beige Book’ (a report on the economy based on anecdotal reports across the country) painted an increasingly upbeat but cautious picture for the US economy going into 2011. Economic activity grew moderately in November and December, and with employment picking up the US could slowly be turning around. There is unemployment claims numbers released today and trade balance figures.

Elsewhere, the Chilean government finally took the plunge and intervened in the foreign exchange markets to stem the rampant strength of the Chilean peso. The government bought large quantities of US dollars, but this had little effect as strong copper prices (Chile’s major export) drove a demand for the peso and saw it strengthen 1% against the US dollar on the day.

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Sterling held firm above the €1.20/£1 level after jumping to a four month high in the last few days as sovereign debt concerns continued to punish the euro and expectations of an interest rate hike in the UK gave sterling a boost, despite a survey by the British Retail Consortium showing that sales dipped 0.3% in December on the same period in 2010. Euro weakness drove the price movement ahead of an important bond auction for Portugal which could see the country head to the IMF and EU if they struggle to raise enough funds. With Thursday’s UK interest rate decision in focus, many analysts feel that the UK is set to see an interest rate hike much sooner than expected. However, there are commentators that feel a hike in response to market pressure could be too early and it could damage already fragile growth. It is a quiet day for UK data again tomorrow, so call in now for a live exchange rate.

In the euro zone, the euro saw a brief respite from heavy selling after Japan pledged to buy euro zone bonds in an attempt to stabilise debt markets. However, the respite soon wore off and the single currency suffered ahead of a key bond auction tomorrow. Portugal is set to raise €1.25bn in an auction that will signal whether the country will be able to afford the interest demanded by investors or it will need to seek a bailout from the EU/ IMF. This is going to cause some volatility, so call in now for a live exchange rate.

In the USA, the US dollar strengthened against the euro yesterday following the concerns over the euro zone debt auction tomorrow, with the euro hitting a low of $1.2905/£1. The US dollar was yet again buoyed by a strong stock market performance after above forecast earnings from Aluminium Company Alcoa led the index higher. This boosted expectations for the rest of the 4th Quarter earnings season, so call in now and ensure you don’t lose out due to poor exchange rates.

Elsewhere, a top US business group has said that the US should not push China for an immediate sharp change in the Chinese yuan exchange rate as this could be detrimental to both countries. The group argue that a gradual change in the exchange rate will help address global balances in the exchange rates.

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Sterling hit a 4-month high against the euro yesterday as the single currency was dogged by concerns over the debt problems in the euro zone. Sterling was also helped against the euro as many (including PM David Cameron) believe inflation is too high in the UK and as such the Bank of England will need to raise interest rates sooner than expected, but the Bank is expected to keep rates on hold this Thursday in the first meeting of the year. The pound suffered against the US dollar after figures showed that house prices fell by 1.6% in the year to December – the biggest drop since November 2009. Out today there is consumer confidence, so call in now for a live exchange rate.

In the euro zone, the euro suffered after a senior source was quoted saying that euro zone countries were piling the pressure on Portugal to seek financial aid from the European Bank and the International Monetary Fund in order to stem the risk of ‘contagion’ spreading to other countries in the region. This led to the single currency falling to a 4 month low against both the euro and US dollar but it did stage a slight rally towards the end of the day as ‘short sellers’ (i.e. those selling the currency and buying back at a lower price for profit) closed out positions at profit. Despite this recovery, the euro is set to remain under significant pressure so speak to a trader to get the best price – especially if you are moving euros into sterling anytime soon.

In the USA, the US dollar hit a 4 month high of $1.29/€1 and regained ground lost against sterling on Friday. As ‘earnings season’ kicked off on Wall Street (where companies announce corporate earnings to the stock market), the US markets had strong expectations and as such shook off any worries related to Europe. It is quite a quiet day for data so call in for a live price to avoid any unexpected movements.

Elsewhere, the Chilean peso and Brazilian real suffered in risk related selling following the crisis in the euro zone. ‘LatAm’ currencies, as they are known, correlate closely with risk appetite and a poor performance from the euro sees the South American currencies suffer.

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Sterling had a strong day on Friday, closing above 1.20 against the euro after the biggest weekly gain against the single currency since mid-November 2010. Sterling benefitted from heavy selling of the euro as concerns over the debt crisis increased. After weaker than expected services and construction data earlier in the week, sterling took advantage as borrowing costs for Portugal, Spain and Italy went up ahead of an important week for European Government borrowing. It is a quiet start for data in the UK this week before the Bank of England’s interest rate meeting on Thursday. Whilst inflation is still stubbornly high and markets are expecting an interest rate hike at some point, this is unlikely to happen this week as the Bank will probably wait and see what impact the VAT increase and spending cuts has before changing current policy. Speak to one of the traders today about your upcoming payments.

In the Euro zone, a large sell off of European ‘periphery’ bonds, an EU proposal on lending and poor German retail sales data saw the euro slump to a 4 month low against the US dollar and drop below 1.20/ £1 against sterling. The EU proposal outlined plans to force those who lend to banks to accept losses should the banks fail and insurance against default for Spanish and Portuguese neared record highs. Analysts said there is scope for further euro losses this week so call in now for a live exchange rate – especially as the news overnight is that Portugal is now under pressure to accept a bailout.

In the USA, following better than expected private jobs figures on Wednesday, there were expectations of big numbers on the Non-Farm payroll data. However, this failed to materialise but 103,000 new jobs were added and the unemployment level fell to 9.4%. The US dollar fell marginally against sterling. Out this week, there is further unemployment data on Thursday so call in now.

Elsewhere, it seems that investors have finally woken up to the realization that the Australian economy is not an invincible bastion to keep throwing money at. The worst flood in half a century and active efforts by China to curb growth mean that Australia’s export of commodities is likely to suffer. There are employment figures released this week which could come in worse than expected and kick start the Aussie dollar on a downward spiral.

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Sterling had a shaky start to the day yesterday, falling against the US dollar and euro following worse than expected data for UK services sector activity for December. However, sterling recovered from the early knee-jerk drop as the poor figures were attributed to the prolonged disruption that December’s snow caused in the UK. As a result analysts dismissed the figures (that showed service sector activity at the lowest since April 2009) as a seasonal anomaly due to winter weather. The UK is still in a very strong position moving forward especially against the euro – a fact demonstrated by the fact that sterling jumped 0.85% to €1.1899/£1 despite the day’s negative data as investors would rather hold sterling than euros. Out today, there is no real UK data released, so call in now for a live exchange rate – especially as there seems to be a steady exodus from holding the euro.

In the euro zone, the problems persisted for the single currency, with the euro falling by 1% to a 5 week low of $1.3013/€1 against the US dollar following Wednesday’s better than expected US employment figures. The euro did see a brief boost following reports that China was looking to buy around €6bn of Spanish government debt, however the currency did not react at all to news that economic sentiment in the region jumped in December. There is a wide range of European data released today along with some important US figures, so make sure you protect yourself from any volatility by speaking to a member of the team sooner rather than later.

In the USA, the US dollar continued to benefit from Wednesday’s ADP non-farm payroll figures that showed nearly 200,000 more jobs were added to the economy than was expected last month. Today we see the Bureau of Labor Statistics ‘official’ non-farm payroll reading, so numbers either side of the 140,000 new jobs that are expected by analysts will see some movement. However, any dollar gains are likely to be limited by the fact that the Fed feels current economic conditions do not warrant a scaling back of the $600bn quantitative easing package in place.

Elsewhere, the Brazilian real slumped yesterday after the central bank imposed reserve restrictions on banks’ foreign exchange positions in a bid to weaken the currency and keep Brazilian exports competitive.

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Sterling fell against the US dollar yesterday as poor UK data contrasted with better than expected US economic data. Sterling dropped by 0.6% to a low of $1.5452/£1 after a PMI survey of construction purchasing managers showed that activity in the sector fell by more than expected. With the poor weather in December, a drop in construction activity should not come as too much of a surprise but yesterday’s fall against the US dollar highlights the fragility that investors feel is facing the UK economy as the VAT hike and government austerity measures take effect. Sterling gained against the euro as, despite poor construction activity, the UK economy is showing a resilience that makes it a far more attractive proposition than the euro – especially given the debt crisis in the region that could cause further issues. Out today in the UK, we have services sector activity and a report on credit conditions from the Bank of England so get in touch now to ensure you get the best price.

In the euro zone, the single currency continued to be hampered by concerns over debt in the region and fell by 0.6% against the US dollar and 0.5% against sterling. News that the Swiss National Bank had stopped accepting Irish bonds as collateral dented sentiment towards the euro, and Portugal came under increasing pressure from international debt markets amid concerns that the country would be forced to accept a bailout akin to Ireland and Greece. Out today there is retail sales data and German factory order data so speak to one of the team now for a live exchange rate.

In the USA, figures showed that new orders from US factories rose unexpectedly in November and minutes from the Federal Reserve’s FOMC interest rate meeting showed that the Fed is content to remain loose with monetary policy. Data showed that the US economy added 297,000 jobs in December which added to an already strengthening US dollar. Many analysts remarked that the US recovery feels more genuine and not just driven by stimulus money, so call in now in case it adversely impacts your pending payments.

Elsewhere, the Australian dollar continued to suffer as the floods caused concern amongst analysts. Some analysts believe that mining operations in Queensland will be shut down for 2-3 months as the flood waters subside. With the Australian economy heavily dependant on commodities trading, this is likely to be a major blow.

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Sterling gained yesterday as manufacturing data showed that activity in the sector grew in December at the fastest rate in 16 years. The Purchasing Manager’s Index (a survey in which purchasing managers are asked about their company’s buying) shot to 58.3 – the highest since September 1994 and beating expectations of a figure of 57. Clearly this shows that the necessary shift is taking place in that the UK economy is moving from an economy driven by consumer debt and credit to an economy that actually produces tangible products, and as such it was a positive day for sterling. The pound was up by around 1% against the US dollar and euro, hitting a high of $1.5643/£1 and breaking back over the €1.17/£1 mark after hitting 7 week lows against the euro last week. Out today, there is construction activity data which could provide a boost if it beats expectations. Call in now for a live exchange rate.

In the Eurozone, the euro fell from 3 week highs against the US dollar yesterday after stronger than expected US manufacturing figures gave traders no reason to hold the single currency. In addition, many investors are concerned over bond issuance in the region as January is notoriously a time when many countries push through a large percentage of their debt funding requirements for the year to ‘front load’ their borrowing. Given the current climate, countries such as Portugal and Spain will have to pay more and more for their debt potentially pushing them towards a similar funding to Ireland and Greece. It will certainly be an interesting month so get in touch with one of the team now to ensure you don’t lose out.

In the USA, data showed that new orders received by factories rose to the highest level in 8 months in November that fuelled risk appetite and saw the US dollar surge against the euro. A 3% drop in crude oil prices saw the US dollar outperform commodity linked currencies. Out today, there is non-manufacturing PMI data and employment figures so there could be some interesting movement. Get in touch now for an exchange rate.

Elsewhere, the Australian dollar fell following the widespread flooding in a key industrial region. There were concerns that the flooding would impact industry and severely impact the economic growth, so call in now for a live exchange rate.

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Happy New Year! In our first currency note of 2011, sterling started the week slowly as UK markets were shut for the bank holiday. Sterling had a volatile end to 2010, dropping sharply on Thursday against the euro to hit 7 week lows which was attributed to heavy ‘year-end’ euro buying. The pound steadied on Friday though and gained against the US dollar after a house price survey by Nationwide showed that house prices rose by 0.4% in December against an expectation of a 0.3% drop. Data showed a 0.6% drop in November and as a result, many remain very cautious about the UK’s outlook for 2011. Today marks business as usual after the holiday period, and there is key manufacturing and lending data so call in now for a live exchange rate.

In the Eurozone, with much of the region closed for the New Year bank holiday yesterday, the euro took the lead from the US dollar falling by 0.6% against the US currency. The single currency gave back most of the gains it made last week against the US dollar after an article in the Daily Telegraph left many traders selling the euro after it claimed that Europe could face another debt crisis within months. There is German unemployment data released today, so call in now for a live exchange rate.

In the USA, in the country’s first trading day of 2011 there was an air of optimism on the markets. Manufacturing figures showed acceleration in production for December showing an increase for the 17th month in a row. Investors felt happier taking risk also after data showed that manufacturing data slowed in China and India that eased concerns over possible overheating in the region. Call in now for a live exchange rate to ensure you get the best price.

Elsewhere, the Brazilian real closed at the highest level since September 2008 yesterday, boosted by optimism over the global recovery that saw investors put money into the high yielding currency. It shows that the emerging market currencies are likely to see similar volatility to last year so ensure you are adequately protected by speaking to one of the team sooner rather than later.

Get a live quote and/or more information from Smart Currency at: http://www.smartinternationaltrade.co.uk/