Sterling has started the New Year much where it left off, hovering just under €1.20/£1 against the euro and at $1.5570/£1 against the US dollar. With many currency market traders beginning to return to work after the Christmas break, many expect that volatility will increase again after a relatively quiet week. As we start 2012, many analysts expect sterling to strengthen against the euro as the debt crisis worsens. Against the US dollar, some feel that sterling will fall as investors move money into the safe haven currency, but others feel that there is scope for sterling to strengthen as the US government struggles to deal with its deficit and continues to bicker over budgets and spending. This week we have a wide array of sector activity data in the form of PMI figures kicking off with manufacturing data today. Call in now for a live exchange rate.

In the euro zone, the euro suffered throughout December, dropping to an 11 ½ month low against sterling in the last week of the year. ‘Shorts’ of the euro – i.e. trades betting that the euro will fall – have increased to record highs in recent weeks and Europe is set to remain as the market focus for the coming months. This week sees bond market auctions in Germany and France which will most likely draw some attention alongside German unemployment figures later today.

In the USA, key events this week include the minutes from the most recent Federal Reserve interest rate meeting that are released today. With more buoyant data coming out of the USA, the minutes might show that the committee are feeling more positive about the US recovery. Friday sees key data in the form of non-farm payroll unemployment data so call in now for a live exchange rate.

Elsewhere, the Danish krone has begun to show signs of safe haven demand as the euro zone crisis has deepened. The Scandinavian currencies could potentially start to strengthen against others as they are not as embroiled in the credit crisis as many other countries. Call in now for a live exchange rate.

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