Smart Currency Rates and Comments 5th December 2012 | Sterling below 1.23 interbank against the euro

Sterling

A very busy week of data releases and public announcements for the UK and the rest of the world continues today with the Chancellors Autumn Statement. Sterling struggled yesterday as the Construction Purchase Manager Index (PMI) data was surprisingly low showing the industry had contracted when a mild expansion had been predicted. Today, we have the Services PMI data released, but, the main focus will be on George Osborne’s Autumn statement and the forecasts from the Office of Budgetary Responsibility (OBR)  for the next two years. Yesterday the British Chambers of Commerce downgraded their forecasts for the next two years and it is expected that the OBR statement is unlikely to drive any positivity into the markets. Furthermore, nervousness ahead of the budget will likely weigh on sterling as few analysts expect good news from the treasury, especially as concerns increase over the future of the UK's AAA credit rating. Get in touch now for the most up to date price.

Euro

The euro continues to strengthen, reaching a 6-week high against the US dollar following the Greek announcement claiming that they would invest around 10 billion euros into national bonds at a much more favourable market price. This was supported by the French Finance Minister. Data showing Spanish unemployment was much better than expected also boosted confidence in the Eurozone in general. On a more negative note, finance ministers from the 27 member states discussed banking supervision and regulation at length yesterday; but, the meeting was adjourned with no agreement being reached. Europe area wide Services PMI data, retail sales data and a benchmark 10-year Spanish bond auction is all on the cards tomorrow; so , there is a lot of room for volatility. Please call in to get a detailed update from your trader.
 
US dollar

The US dollar struggled yesterday and hit a six week low against the euro and a four week low against sterling, but rallied towards the end of the day settling in around the 1.61 level. Employment data released today will be used by traders to try and second guess the highly influential non-farm pay rolls release on Friday. As a result, we often see a knee-jerk reaction if the actual releases differs significantly from the forecast figures. Non-manufacturing PMI data is also being released later today and the markets will hope for a much better reading than the dreadful manufacturing PMI figures released on Monday. The biggest news story that continues to move for the US dollar is the impending fiscal cliff; with President Obama stating yesterday the Republican proposal won't do enough. We will have to wait and see if the two parties can come to some form of agreement before the January deadline. Call in now for a live quote.

Worldwide

Elsewhere, the Swiss franc was one of the worst performers yesterday after Credit Suisse confirmed it would start charging negative interest rates on accounts which hold Swiss francs; as a result, the EUR/CHF rate moved away from its peg at 1.20 reaching 1.2140. The Reserve Bank of Australia cut its interest rates to 3% , down from the previous of 3.25% as was widely anticipated; but, the Australian dollar performed relatively well as the comments from the central bank indicated that another interest rate cut is not likely in the near term. The Bank of Canada kept interest rate on hold at 1% as was widely expected. GDP data was released from Australia late last night and this evening we will see the Reserve Bank of New Zealand's interest rate decisions and rate statement.