Smart Daily Currency Note | Christmas spirit favours the euro, will this last?

Sterling

Overall it has been a reasonable week for sterling. Although it touched a two month low of 1.224 against the euro, it has made strong gains against other major currencies. Wednesday saw sterling buy more dollar than at any point since September, hitting 1.6307, although this can probably be put down to dollar weakness in the shadow of the fiscal cliff as opposed to any particular strength for sterling. The most important news release were the minutes from this month's monetary policy committee meeting. Although all 9 members remained unanimous in holding interest rates, they were less than positive about the economic outlook and one member voted in favour of increased quantitative easing. Today the office of national statistic publishes two important pieces of data; the current account and the public sector borrowing data. Both of which were considerably worse than anticipated last month. Current forecasts are not particularly positive, but markets will react nonetheless if the results exceed expectations and with thin trading volumes at the moment any movement could be amplified and become significant. Get in touch now for the most up to date rates.

Euro

The euro performed well all week, strengthening against its major peers and reaching eight and two month highs against the US dollar and sterling respectively. This was down to positive data coming out of Germany with improved business sentiment and the President of the European Central Bank (ECB) remaining positive about the future of the Eurozone, as well as another member of the ECB stating that he did not see the need for interest rate cuts. Greece also helped improve euro sentiment receiving its next bailout tranche, and news that Standard and Poor's had improved Greece's credit rating from selective default to B-. Today sees the release of very little news released from the Eurozone, with just German Consumer Climate data being released. Many eyes will remain fixed on the United States, with any news around the current fiscal uncertainty likely to impact the euro. Call in now to get the latest news from your trader.

US dollar

The US dollar lost ground in the first half of the week as political rhetoric was far from helpful in resolving the problem of the fiscal cliff. Come Thursday both the Republicans and the Democrats began to give ground and we saw a small rebound for the US dollar. Friday see's the release of manufacturing data from the US. The best outcome for the Dollar would be inclinations of an increase in activity signalled by rising purchasing orders. Yesterday saw the release of Home Sales and  Manufacturing data, both coming out better than previously forecast. Today's major data release focuses on core durable goods orders, forecast to see a slight decline on last month's increase. Call in now to get a live price from your trader.

Worldwide

It was once more a week dominated by the Japanese yen, as the currency continued to lose substantial ground versus its major trading peers; touching nearly a 20-month low versus the US dollar. News that new Prime Minister, Shinzo Abe and the Bank of Japan had indeed increased quantitative easing as expected led to a significant sell off of the yen in favour of alternative currencies. It has been somewhat of a mixed week for the higher-yielding currencies, as a play-off between risk appetite and aversion has seen the likes of the Australian and New Zealand dollars fall throughout the week; with much cause being accrued to an apparent deadlock in negotiations between US politicians. Today, the major data releases focuses on Canada, with both core CPI inflation data and GDP expected to give an insight into the current economic climate. Call in now for the latest news and to get a live rate from your trader.