Sterling recovered from Tuesday’s five month low against the euro and strengthened by 0.7% to hit a high of €1.1424/£1. It also made gains against the dollar hitting a daily high of $1.6083/£1 after data showed UK service sector activity grew at the fastest monthly pace in January since July 2002. In addition, sterling benefited as Bank of England policymaker Martin Weale declared that the bank should increase interest rates as there is a high risk that inflation will not return to its 2% target. House price figures from Nationwide are expected later today and are expected to show a small drop. Ensure you don’t miss out by speaking to a trader today.

In the euro zone, the euro took a slight hit today falling by 0.4% against sterling. Despite this fall on the back of sterling strength, the euro is up 2.3% on the year and is currently buoyed by market expectations that the European Central Bank’s will raise interest rates before the Bank of England. Many analysts believe that this will happen as early as next month. Out today there is German retail sales data and European inflation – both of which could cause volatility.

The US Dollar stayed fairly flat yesterday. There is a high possibility that the dollar will remain supported throughout the week after a key Federal Reserve official said that the central bank may have to tighten monetary policy to avoid inflation. US ADP non-farm payroll (a key pre-cursor to Friday’s headline figures) came in slightly lower than expected but did not cause much movement. Today sees weekly unemployment figures, so ensure you are protected by calling in today.

Elsewhere, Asian currencies strengthened yesterday on rumours that the central banks in the region will increase interest rates in order to avoid inflation. The South Korean won lead the way gaining by 0.6% against the US dollar. Call in now as there is a lot of volatility in the market – especially with the situation in Japan.

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Sterling fell to a 5 month low against the euro yesterday on expectations that UK interest rate rises would lag the euro zone. The pound also struggled to move off a 2 month low against the US dollar. UK data showed that 4th quarter GDP fell less than expected; with revised figures showing that the economy contracted by 0.5% rather than 0.6% that had initially been estimated. Mortgage approvals rose slightly, but the real key data will be the 1st quarter GDP data for 2011. The Bank of England will want to see growth if it is to start raising interest rates. Out today, it is a relatively quiet day for UK data but a member of the Bank of England speaks later which could see some fallout with regards to market expectations of interest rate movements.

In the euro zone, European Central Bank President Jean-Claude Trichet was in the spotlight again after making further comments regarding interest rate hikes in the region. Markets are now fully expecting an interest rate rise in the euro zone next month. This helped the euro strengthen, despite Portugal’s debt being downgraded to one level above ‘junk’ status, causing yields to rise even further. Call in now for a live exchange rate.

The US dollar strengthened yesterday after St Louis Federal Reserve President James Bullard insisted that the Federal Reserve should begin to normalise its $600bn bond purchasing programme. Today we have ADP non-farm payroll change – an important pre-cursor to Friday’s main numbers. Call in now for an exchange rate.

Elsewhere, the Australian dollar rose to a 29 year high against the US dollar – the highest since 1982, when it was a managed (i.e. not free floating) currency. Risk appetite is driving Australian dollar strength, so call in to protect yourself.

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Sterling held around 2011 lows against the euro on Friday and was poised for further falls on concerns over UK economic growth and uncertainty about the timing of an interest rate hike by the Bank of England. Poor retail sales figures saw sterling extend losses that began with UK growth forecasts being cut by Chancellor George Osborne in last week’s Budget. At the beginning of last week, markets had been pricing in a rate hike of 0.25% as early as May, but following the growth downgrade and Bank of England minutes that showed a reluctance to hike rates, this expectation has been pushed back to August. Out this week, we have mortgage lending figures, final GDP figures for the 4th quarter and house price data towards the end of the week. Call in now for a live exchange rate.

In the euro zone, the euro lost ground this morning as German Chancellor Angela Merkel’s CDU party lost a key regional election. Last week’s European Summit didn’t throw up any surprises and there seems to now be some certainty with regards to the European stability fund. Portugal may be the next in line for a bailout so the markets will be keeping a close eye on things. ECB President Jean-Claude Trichet speaks later today, and with an interest rate hike due in April we could see some volatility so call in for a price to ensure you don’t miss out.

In the USA, GDP figures were revised upwards on Friday showing that the economy grew by 3.1% in the 4th quarter of last year, up from the previous estimate of 2.8%. The key releases today could have quite a significant impact – personal spending was poor in January and pending home sales are expected to show a steep rebound following poor figures in January, so call in as the US dollar could see some strength.

Elsewhere, as market panic subsides after the Japanese earthquake and tsunami, Japanese yen volatility is falling too. The Japanese yen/ Australian dollar “carry trade” (i.e. borrowing cheap yen to fund investments in the higher yielding Australian dollar) picked up again last week as investors returned to more trading patterns. Progress on the nuclear reactor helped in this respect also. Libya is still a big issue also, so make sure you are protected by speaking to one of the team sooner rather than later.

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Sterling fell to a 4 ½ month low against the euro as poor UK retail sales data raised concerns over a fragile economy and credit rating agency Moody’s warned that slower growth combined with spending cuts could make it harder for the government to rein in the deficit. Retail sales fell by 0.8% on the month against an expectation of a 0.6% fall. The reversal of fortune this week has been staggering – early in the week, analysts were talking about interest rate hikes in May following high inflation but now the indicators seem to be showing a lack of demand in the economy which will see growth struggle.

In the euro zone, the euro gained against sterling on a weak UK outlook but itself slipped briefly against the US dollar following a downgrade of the Portuguese credit rating by rating agency Standard & Poor’s. The euro did recover as European leaders agreed on Thursday to increase the financial rescue fund to the full €440bn by June. The EU Summit continues today, so call in now for a live exchange rate.

In the USA, the US dollar came under pressure yesterday as a global equities recovery saw risk appetite return and investors look to higher yielding currencies. US dollar weakness was most profound against the Australian dollar, where the US dollar is hovering around lows last seen in 1982. We have the final GDP figures for the 4th quarter released later, so censure you protect yourself by speaking to a trader sooner rather than later.

Elsewhere, Japanese markets have settled somewhat as progress seems to be being made on the crippled nuclear power plant. Against the US dollar, investors seem to be wary of the threat of further selling intervention by the central bank and as such the yen seems to have stabilised around the Y80/$1 mark.

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Sterling fell by 0.8% against the US dollar as Chancellor George Osborne lowered the estimate for UK economic growth to 1.7% this year from a previous forecast of 2.1%. Inflation is also expected to remain between 4% and 5% which raises the possibility that we could be looking at a period of “stagflation”. Heading into yesterday, sterling had been buoyed by higher than expected inflation and an anticipation of earlier than expected interest rates. However, the Bank of England minutes showed no changes to last month’s voting and the Budget delivered a downgraded growth forecast – both of which contributed to sterling’s drop. Out today we have retail sales figures that could see some volatility, so call in now for a live price.

In the euro zone, the euro held firm as expectations for an interest rate hike next month rebounded and this contrasted sharply with the Bank of England’s stance and also poor US data. The euro’s gains were limited by concerns over Portugal, where there were worries that a political crisis could see the country seeking emergency help from the European Union. The European Summit kicks off today, so keep an eye out for any news that could see significant movements.

In the USA, housing figures disappointed yet again with new home sales data undershooting the estimate by 40,000 and hit a record low for February. Crude oil was trading at $116 a barrel as tensions in the Middle East and North Africa kept investors cautious. Call in now for a live exchange rate.

Elsewhere, the New Zealand dollar performed well overnight as 4th quarter growth beat forecasts and helped calm concerns over the onset of a recession.

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CPI inflation hit the highest level since October 2008 yesterday, and saw sterling hit a new 14 month high of $1.64/£1. Higher than expected inflation saw renewed calls for an interest rate hike, with markets pricing in a hike by the Bank of England as early as May. Whilst it is all too easy to get carried away by the headline grabbing inflation figures, the Bank of England is unlikely to budge just yet. Analysts are expecting today’s Budget to show that public finances are performing better than forecast – the cynics amongst you would argue that the government deliberately painted as bleak a picture as possible to start with. Today will be interesting – minutes from the Bank of England’s March meeting and the Budget, but don’t expect Mervyn King to bow to the will of the markets and hike interest rates just yet. Call in now for a live exchange rate.

In the euro zone, the euro slipped after hitting a 4 ½ month high against the US dollar yesterday. The single currency hit $1.4249/€1 before sliding on profit taking by investors; however it is unlikely to fall too far given rate expectations. Markets are expecting an interest rate hike next month, and given comments by key ECB policymakers this is a virtual certainty. We could see some movement against sterling depending on the outcome of the UK Budget.

In the USA, it was a relatively quiet day for data, but the US dollar slid across the board with the US dollar index (a measure of the currency against a ‘basket’ of other currencies) hit a 15 month low. Against the Japanese yen, the US dollar finished slightly down but a way away from the lows that saw the G7 nations intervene in the currency markets on Friday.

Elsewhere, the New Zealand dollar outperformed in overnight trade gaining on average 0.5% against major counterparts. This followed a report by the IMF that estimated the country’s economy would grow by 4% next year as the country begins a wide programme of rebuilding following the earthquake.

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Sterling hit a 2 week high against the US dollar and is set to test the highest levels for over a year if inflation figures today come in higher than expected. UK CPI is expected to grow to 4.2% in February, up from 4.0% in January and nearly double the Bank of England’s target level of 2.5%. This further supports the case for an interest rate hike and as such, sterling has performed well against both the US dollar and euro. Markets are likely to wait until Wednesday’s Budget and Bank of England minutes before making a full assessment of the UK’s interest rate expectations so call in now for a live exchange rate.

In the euro zone, the euro hit a 4 ½ month high against the US dollar yesterday, breaking above $1.42/€1 after further comments from key ECB policymakers suggested the European Central Bank will target an interest rate hike as early as next month. ECB President Trichet spoke yesterday and reaffirmed his views from the last meeting, which were that inflation is at a level that requires an interest hike. Call in now for a live exchange rate.

In the USA, data showed that existing home sales fell by far more than had been expected. The US housing recovery is likely to be a long, drawn out process and as such these figures do not help things. Out today, one of the Federal Reserve policymakers speaks in Dallas which could see some volatility.

Elsewhere, positive news from the Japanese nuclear reactors saw investors return to riskier, higher yielding assets. In addition, fears over another large scale intervention by the G7 nations or even the Bank of Japan on its own has kept the yen away from all-time highs. Call in now for a live exchange rate.

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Sterling is set for a busy week ahead with the Budget, Bank of England minutes, inflation and retail sales figures all being released against a backdrop of air strikes in Libya and worries over a nuclear meltdown in Japan. Risk sentiment has shifted to “war” mode as Allied forces launched air strikes exactly 8 years after the Iraq operation began in 2003. Expectations for UK data are relatively strong this week, with the Budget set to deliver a better set of public finances than initially expected. Retail sales are expected to drop marginally as is the norm at this time of year, but inflation is expected to rise to 4.2% for February. Whilst this would normally see sterling strengthen, when set against a risk adverse framework caused by military action, sterling is unlikely to follow normal trends. Either way it is set to be a volatile week, so call in now for a live exchange rate.

In the euro zone, EU Finance ministers meet yet again in Brussels today to discuss proposals to tackle the sovereign debt crisis. This provides a final opportunity for debate before the EU Summit (24-25th March) at which any proposal is expected to be signed off. Recent proposals have gone some way to easing investor concerns, but the markets need more clarity on future bail-outs of countries. If this does not happen over the coming meetings, expect debt markets to punish that lack of clarity. After nigh-on committing to a rate hike in April, any change in tack from ECB policymakers following the situation in Japan and Libya is likely to cause euro weakness. ECB President Jean-Claude Trichet speaks today.

In the USA, further disappointing figures are expected from the housing market this week with existing home sales and house prices set to fall. The US housing market is a long way off from recovery. Friday sees the final figure for 4th Quarter GDP which is expected to remain the same.

The Australian dollar outperformed overnight against other major currencies. The risk sensitive currency was given a boost following news that 2 out of 6 of the damaged nuclear reactors in Japan had been brought under control and progress was underway on a third. Call in now for a live exchange rate.

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Sterling dropped to a 4 month low against the euro, but gained against the US dollar yesterday and overnight. The main impetus in trading yesterday was a stronger than expected bond auction in Spain which set the tone for risk appetite. Overnight we have seen a large scale co-ordinated intervention in the currency markets by the G7 nations to weaken the Japanese yen and reduce volatility in the markets. The scale and decisiveness of this move saw the Japanese yen slump by nearly 4% and has helped risk appetite return. There is no real data out today – the focus is very much on global events right now, so call in for a live exchange rate.

In the euro zone, the euro hit the highest level against sterling since early November and gained to above $1.40/€1 against the US dollar on the stronger than expected bond auction in Spain and interest rate hike expectations. The expectation of an April rate hike by the European Central Bank has been scaled back in recent days from total certainty, but markets are still pricing in an 80% chance of an interest rate hike next month so ensure you speak to one of the team to protect yourself.

In the USA, the UN Security Council authorised military action against Libya last night hours after Libyan leader Muammar Gaddafi threatened to storm the rebel city of Benghazi showing “no mercy, no pity”. Whilst a full scale invasion was not part of the resolution, a no-fly zone in Libyan airspace is expected to be enforced shortly. There is no real data today, but plenty happening to cause volatility.

Elsewhere, the Japanese yen gained by 4% overnight following a combined intervention by the Bank of England and other G7 nations helped boost risk sentiment overnight, underpinning ‘riskier currencies’ such as the euro and Australian dollar.

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Sterling slipped against the US dollar yesterday as concerns over the UK economy and worries over the Japanese nuclear crisis dented the pound. The OECD also cut its expectations for UK growth citing falling house prices, weak domestic consumption and uncertain global demand. There was some positive data in the form of the unemployment claimant figures that unexpectedly showed that 10,000 fewer people claimed unemployment benefits in the last month which was nearly 12,000 better than was expected. Out later today, we have consumer inflation expectations which could see some volatility so call in now for a live exchange rate.

In the euro zone, the euro fell against sterling and the US dollar as Portugal’s credit rating was downgraded late on Tuesday night by rating agency Moody’s. In addition, a cooling of rate expectations nudged the euro downwards as ECB policymaker Christian Noyer cast doubts on expectations by stating that the bank would take stock of events in Japan before making a decision. It is a quiet day for data tomorrow, but the volatility in the market means that anything could happen so call in now for a live price.

In the USA, the US dollar sank to a 16 year low against the Japanese yen driven by ongoing concerns over the damaged nuclear reactor in the earthquake and tsunami stricken country. However, markets expect that the Japanese central bank will intervene to prevent any further appreciation in order to keep Japanese exports at competitive prices. There is a wide array of data released today in the USA, so call in to ensure you don’t lose out.

Elsewhere, the Swiss franc moved towards record levels against the US dollar as investors scrambled for refuge amid turmoil in the Middle East and Japan. Concern over violence spreading to Saudi Arabia sparked fresh concern yesterday. Call in now for a live exchange rate.

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Sterling fell across the board yesterday as fears of a nuclear crisis in Japan led investors to sell off holdings in ‘riskier’ currencies and expectations of a rate hike in the UK were pushed back. Against the euro the pound slipped below 1.15/£1 for the first time since November as markets priced in a 0.25% interest rate hike in either August or September. Last month, expectations were for a May or June hike and the change of sentiment has hurt sterling. Despite the UK’s AAA credit rating being reaffirmed recently, sterling holdings are higher yielding than the yen, US dollar and Swiss franc and as such are seen as ‘high risk’. When markets panic in the wake of nuclear explosions, tsunamis and Middle East turmoil only the safest of currencies will do. Stay in touch as there is a lot of volatility.

In the euro zone, financial markets also cut their expectations of a European interest hike later in the year as stock markets suffered and turmoil in the Middle East and Japan left investors questioning the wisdom of a rate hike in the face of doubtful global growth. However, there is still a strong expectation of a move by the ECB in April, which is why the euro saw such strength against sterling yesterday.

In the USA, the Federal Reserve met last night and maintained rates and quantitative easing on hold, but did state that they are unlikely to add further stimulus as the US recovery gathers pace. There was widespread panic yesterday in Japan as concerns over a nuclear crisis left investors heading for safe currencies. The US dollar strengthened against the euro and sterling.

Elsewhere, the higher yielding ‘commodity’ currencies of the Australian dollar, NZ dollar and South African rand had a terrible day after falling around 2% against most currencies. The rand in particular suffered – falling nearly 3% against the US dollar as Japan is a key trading partner to South Africa. If you have been holding off on buying rand, now is a far better time to look at it as it was about the only currency that sterling strengthened against.

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Sterling regained ground after falling to a 4 month low yesterday of €1.1506/£1 against the euro. Sterling dropped over the weekend after an agreement amongst European leaders to increase the bailout package, but recovered marginally as investors locked in profits from the euro’s move and the UK’s credit rating was affirmed by rating agency Fitch. The agency announced that the UK’s ‘triple AAA’ rating is looking increasingly secure as the coalition’s austerity plan takes effect. It is a relatively quiet day for data, with unemployment and a speech by Mervyn King tomorrow. Sterling should recover against the euro, especially if the Bank of England hikes interest rates by 0.25%, as they are expected to.

In the euro zone, the move by policymakers over the weekend to boost the euro zone bailout fund saw euro strength. However, comments by Eurogroup chairman Jean-Claude Juncker pushed the euro over $1.40/€1 as he stated that there had been a significant increase in inflation. Expectations that the European Central Bank will raise interest rates as early as next month have supported the euro, and these comments were no different. Out today there is German economic sentiment, so call in now for a live exchange rate.

In the USA, the US dollar rebounded from a 4 month low against the Japanese yen after the Bank of Japan extended $183bn of liquidity to support its banks in the wake of Friday’s destructive tsunami and earthquake. This bold action helped ease money markets and as a result fears over funding and liquidity were kept at bay. US dollar volatility is at nearly 12%, and the Japanese yen is set to strengthen as the Japanese government sells off part of its US$1 trillion US government bond holdings in order to pay for rebuilding.

Elsewhere, Russian President Vladimir Putin said on Monday that there was little threat of a global nuclear disaster as Japanese nuclear technicians battled to avert a meltdown at an energy plant. Either way, the impact of the earthquake is far reaching and currency markets have been incredibly volatile today.

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Sterling hit a 6 week low against the euro and a 3 week low against the US dollar on Friday as markets began to push back expectations over interest rate hikes in the UK. In addition, the catastrophic earthquake and tsunami in Japan saw investors cut their exposure to perceived high risk currencies which put pressure on the pound. Out this week, there is claimant count figures released on Wednesday and Bank of England governor Mervyn King makes a speech, which could further impact market expectations over interest rates. Call in now for a live exchange rate.

In the euro zone, the euro strengthened against the pound and US dollar on Friday as European leaders agreed a deal over higher retirement ages, labour market flexibility and debt and deficit limits for European countries. An agreement on Saturday night to strengthen the bailout fund is one step in the right direction, but there is still a need for peripheral countries to shore up their finances. This week sees German economic sentiment, so ensure you protect yourself by talking to one of the team sooner rather than later.

In the USA, the major event of the week is the US Federal Reserve’s interest rate meeting on Tuesday. With an economic recovery that is running far from its potential and surging oil prices, the Fed is not expected to change much. There is potential for a large sell off of US bonds that are currently yielding very little.

Elsewhere, the Japanese yen saw a surge in demand following the country’s earthquake as investors cut positions that had been funded by cheap Japanese yen. The move saw large demand for yen and also speculation over potential insurance pay outs, and the currency surged. Whilst a strong currency is traditionally positive, the Japanese economy relies on exports and this is not likely to encourage export.

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Sterling slipped yesterday after the Bank of England kept interest rates on hold at 0.5%. With many not expecting an interest rate hike until May at the earliest, some believed there might be an outside chance of an interest rate hike at the meeting. Earlier in the day, the pound did experience some strength against the euro after Spain’s credit rating was downgraded. Whilst inflation is an issue and markets are expecting an interest rate hike soon, the Bank of England are notoriously conservative and are unlikely to change much soon. The UK recovery is a little shaky, but ultimately we are in a better long term position than Europe and the USA. We (like many) expect to see sterling recover later in the year as Europe’s debt issues come to the fore again and the UK starts to outpace the US recovery. Call in now for a live exchange rate.

In the euro zone, the euro slipped against the US dollar and sterling on news early yesterday morning that Spain’s credit rating had been downgraded from Aa2 to Aa1 with a negative outlook. Euro zone debt problems are starting to come to the fore again, and there is nothing like a credit downgrade to do just that. However, interest rate expectations are likely to keep the euro supported against the pound and US dollar.

In the USA, the US dollar benefited from increased risk aversion as fighting in Libya escalated with Colonel Gaddafi’s son stating the time had now come for full scale military action against the rebels. In addition, US jobs data came in far worse than expected with figures showing that 26,000 more people claimed for unemployment this week and the trade deficit widened. Call in now for a live exchange rate.

Elsewhere, a massive earthquake has hit Japan causing a large tsunami. The Japanese yen has come under pressure already this morning – falling against the US dollar and seeing volatility against other US dollar currency pairs. Call in now for a live price.

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Sterling crept up against the euro yesterday after the euro’s recent rally ran out of steam on concerns over fragility in the euro zone. The pound hit a high of €1.1671/£1 on the day and better than expected UK trade figures helped sterling push over $1.62/£1 against the US dollar. Data showed that the trade deficit for the previous month narrowed from £9.7bn to £7.1bn – nearly £1.5bn better than expected. This is good for the UK as it shows that more goods were exported than imported last month, meaning that more money is coming into the UK economy. The big release today is the Bank of England’s interest rate decision. With uncertainty over the impact of higher oil prices, the Bank is likely to keep rates on hold but call in to ensure you are prepared for a shock interest rate hike – it only needs a 2 member ‘swing’ to see this happen.

In the euro zone, the recent euro rally petered out yesterday as investors and analysts began to question the wisdom of an interest rate hike when the majority of the region is suffering from astronomic levels of debt. Whilst there is likely to be a rate rise in April which will keep the euro supported, in the medium term the euro is likely to suffer from fragility over the debt crisis – highlighted by a downgrade of Spain’s debt by Moody’s. The issue was essentially deferred until European finance ministers could decide on what to do, but nothing has happened on that front so the markets are likely to expect some kind of resolution.

In the USA, the US dollar slipped against sterling but is likely to remain within the range of $1.61-1.63 as traders buy on the low and sell on the high. Oil prices rose to over $116 per barrel as fighting intensified in Libya and reports emerged of several oil facilities coming under attack. Oil is the big issue – especially in the USA, and the outcome of the current crisis is likely to set the tone for the US economy for the next few months.

Elsewhere, overnight the Royal Bank of New Zealand unexpectedly slashed interest rates by 0.5% in order to pre-empt the economic fallout from the recent earthquake. Many were expecting an interest rate cut of 0.25%, with some even calling for rates to be kept on hold. This is a bold move by the bank, so call in now as the New Zealand dollar is likely to see some weakness.

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Sterling fell against the US dollar as investors sold off positions, but sterling did recover some ground against the euro as sovereign debt worries saw investors selling the euro. UK data was also poor with a retail sales survey underperforming and a house price survey coming in below expectations. The Bank of England begins their monthly interest rate meeting today, and with the current ‘scores on the doors’ at 6 members in favour of doing nothing and 3 in favour of an interest rate hike, there needs to be a 2 member swing to see anything happen. Well within the bounds of possibility? We find out on Thursday so call in now to get the best price.

Despite expectations that the European Central Bank will look to raise interest rates as soon as next month, the euro suffered today as a result of widening bond spreads following the ratings downgrades in Spain and Greece over the last few days. Analysts expect the euro to remain strong in the short term on interest rate speculation, but fall off against sterling and US dollar as the debt crisis comes to the fore once again. Out today we have German industrial production figures, so call in now for a live exchange rate.

In the USA, the US dollar took back some of the ground lost against the euro as investors contemplated what higher interest rates would mean for the euro zone with many countries already laden with high levels of debt. In addition, the ramifications of higher oil prices are a concern for many investors who feel that the current spike could push costs higher globally and see the world sink to a double dip recession.

Elsewhere, New Zealand’s interest rate decision is due today with commentators sharply divided over what will happen. With uncertainty following the earthquake, many are calling for a 0.25% cut from the current 3% but there is likely to be no change. Call in now for a live price.

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Sterling fell to a 5 week low against the euro yesterday as expectations of an interest rate hike in the euro zone saw sterling drop below €1.16/£1. Sterling has itself been on a strong run of form since the beginning of 2011 as the Bank of England battles with stubbornly high inflation, but a poor set of figures for services sector activity left many cutting back expectations of a UK interest rate hike. Overnight we had retail sales and house price figures that painted a mixed picture, with retail sales slightly worse than expected. A house price survey showed fewer estate agents reporting a fall in prices, but the picture was still poor. Mervyn King speaks at the Asian Business Association Dinner in London, and ahead of Thursday’s Bank of England meeting this speech will be watched closely.

In the euro zone, the euro hit a 4 month high against the US dollar yesterday after expectations of an interest rate hike as early as next month saw the euro break over the $1.40/€1 barrier. Friday’s downgrade of Spanish debt and yesterday’s downgrade of Greek debt were overlooked as investors focussed on Jean-Claude Trichet’s shock announcement over European interest rates. Call in now for a live exchange rate as there is a lot of volatility in the market.

In the USA, the US dollar has now fallen by 9% against the euro on relative interest rate differentials – i.e. the market expects the European Central Bank to raise interest rates way ahead of the USA. However, data is showing that the US recovery is improving whilst the European debt crisis remains and could flare up at any moment. As a result, many analysts are predicting that the euro will return to levels in the $1.20’s against the US dollar as the fiscal bite takes hold in Europe later this year.

Elsewhere, the South African rand strengthened to a 7 week high against the US dollar yesterday as gold gained to $1,444.95 an ounce and violence in Libya boosted oil to a 29 month high. Against sterling, rand gained by 0.5% to finish the day at ZAR 11.124/ £1.

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Sterling fell by nearly 1% against the euro yesterday as poor UK services sector activity sector contrasted sharply with a shock statement from the European Central Bank that the ECB could hike interest rates in the region as early as next month. Investors had up until now been pricing in a UK interest rate hike before Europe and the shock move by the ECB saw the euro break back into the €1.16’s against sterling. UK Services PMI, which measures the level of activity in the services sector, came in below expectations that left a sour taste in the mouth after an otherwise positive week for UK fundamental data. Out today, we have Halifax house prices which could cause some volatility so call in now for a live exchange rate.

In the euro zone, the euro gained by 0.7% against the US dollar as ECB President Jean-Claude Trichet said that “inflationary risks are to the upside” and that “strong vigilance” is required. The possibility of the ECB raising interest rates far sooner than expected has seen the single currency jump against the US dollar and sterling. Call in now for a live exchange rate.

In the USA, a proposal by Venezuelan President Hugo Chavez to broker a peace deal in Libya saw oil prices ease off and US stock markets on Wall Street posted gains. Unemployment figures were positive, with the number of claimants for unemployment insurance falling by 20,000 on last week. Tomorrow we have the key figure – non-farm payroll data. This employment data causes a lot of movement normally, so ensure you are protected.

Elsewhere, in a research note to clients, Lloyds TSB estimate that the price of oil (currently around $110) could hit $250 per barrel if the situation in the Middle East and North Africa continues which could potentially wipe £45bn off the UK’s GDP. We will have to see what happens…

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Sterling remained around a 13 month high against the US dollar yesterday as investors continued to sell the US dollar on speculation that US interest rates would stay in place much longer than the UK. In addition, stronger than expected construction sector activity helped boost prospects for the UK economy and many feel that the Bank of England will have no choice but to raise interest rates sooner rather than later if fundamental data improves as it has done this week. Today’s key data release is UK services sector activity which will give a good picture as to whether interest rates are likely to remain set to rise in June as many expect. Call in now for a live exchange rate.

In the euro zone, the euro traded around a 4 month high against the US dollar yesterday on expectations of interest rate hikes in the region. Recent comments by key policymakers in the region about monetary policy and high inflation mean that investors are expecting European Central Bank President Jean-Claude Trichet to step up his anti-inflationary rhetoric at today’s central bank interest rate meeting. However, given the relative strength of the euro, it could drop off following the meeting regardless of what happens as investors sell on the news – call in now for a live exchange rate.

In the USA, the US dollar continued its recent downward trend yesterday and even strong fundamental figures in the form of better than expected employment figures did not help. The US Federal Reserve remains in ‘dovish’ mode (i.e. loose monetary policy) which contrasts with the UK and Europe where there is talk of interest rate hikes. Out today there is further unemployment data, so ensure you speak to a trader sooner rather than later.

Elsewhere, the New Zealand dollar has had a very poor week, hurt by expectations of an easing of monetary policy by the central bank and concerns over the impact of the recent earthquake. Call in now for a live exchange rate.

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Sterling jumped to the highest level against the US dollar for over a year after stronger than expected UK data left investors expecting an interest rate hike far before the USA. House prices, mortgage approvals and UK manufacturing PMI all beat expectations and data showed that net lending to individuals had improved. This saw sterling jump to $1.6330/£1 – the highest since January 2010 – as investors felt that the Bank of England was set to raise interest rates before the summer. In testimony to a government committee, Bank of England Governor Mervyn King maintained his view that inflation would remain above the target level of 2% for the rest of the year. In terms of data, we have construction sector activity figures which could see a boost. Call in now for a live exchange rate.

In the euro zone, figures showed that German unemployment fell by more than expected in February. The euro hit a high of $1.3852/€1 against the US dollar but gave up those gains as US Federal Reserve Chairman Ben Bernanke gave a mixed assessment of the US recovery. In a volatile day of trading, the euro also dropped against sterling. It is a relatively quiet day for data, but volatility is likely to remain so call in now for a live exchange rate.

In the USA, all eyes have been on Federal Reserve Chairman Ben Bernanke’s testimony to the US Congress. Bernanke’s assessment was mixed; stating that the risk of negative growth had fallen, but job growth was far too anaemic. Importantly, he offered no clue as to when the Fed would look to rein in the $600bn of Quantitative Easing that has been pumped into the economy, leaving markets to speculate that the USA would lag far behind the UK and Europe in tightening rates. Call in now for a live price.

Elsewhere, the Canadian dollar fell against the US dollar after the Bank of Canada kept its main interest rate on hold at 1% and gave no clue as to plans to increase rates in the future. Once again, tensions in the Middle East have kept crude oil at around $112 per barrel.

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Sterling gained against the US dollar yesterday as concerns over the price of oil dented the US currency. Sterling has benefited recently from expectations that the Bank of England is looking at raising interest rates by the summer. However, with this ‘priced in’ (i.e. already reflected in the exchange rate) to the sterling/ US dollar exchange rate, there is not much room for a move beyond $1.6250/£1. It is also a very risky week for sterling, with a wide array of purchasing data from a number of key sectors of the UK economy. Poor readings from these surveys could quite conceivably unduly impact interest rate expectations in the UK and see sterling fall. Call in now for a live exchange rate to ensure you do not lose out.

In the euro zone, the euro strengthened to the highest level against the US dollar since the start of February as investors speculated over an upcoming speech by US Federal Reserve Chairman Ben Bernanke. Many expect the US policymaker to maintain his soft approach to US monetary policy which contrasts with recent talk of tighter monetary policy in the euro zone. Inflation in the region hit a 2 year high of 2.3%, and is set to rise further in February as higher oil prices filter through. Get in touch now for a live exchange rate.

In the USA, rising oil prices have caused concerns over US growth. Prohibitively high oil prices could see impact on the fragile economic recovery, and many investors are concerned over the impact on US foreign policy over the political upheaval taking place in the Middle East and North Africa. This saw the US dollar fall to a 3 ½ month low against a basket of currencies – not helped by poor pending home sales figures that came in worse than expected. Get in touch now as volatility is high.

Elsewhere, the situation in Libya seems to be getting worse with world leaders putting pressure on the Libyan leader Muammar Gaddafi to leave power. From a currency perspective, any kind of instability has been benefiting the Swiss franc and there is no reason we won’t see the Swiss currency strengthen further, so call in now to avoid losing out.

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