Smart Daily Currency Note | Christmas cheer fails to lift sterling

Sterling

Christmas cheer has done little to help sterling this week, enduring a torrid time against the euro dropping to a 8 month low of 1.2160. Sterling had been fairly range bound against the US dollar until yesterday, where it peaked at 1.6200 before dropping sharply to 1.6060. Data released yesterday showed that the number of new mortgages approved had risen by less than was expected; not a good sign for the UK's housing market. There is no significant data expected to be released from the UK today - that being said, the markets remain extremely volatile with trading volumes particularly low during the holiday season, so call in now to speak to your trader.

Euro

The euro has had a fairly positive week despite the European market closures and Germany enjoying three days of bank holiday, reaching a 8 month high of 1.2160 against sterling and a 1 week high of 1.3280 against the US dollar. First thing this morning we saw French consumer spending data released and we also have the benchmark 10-year Italian bond auctions today. Call in now for the latest rates and a live update.

US dollar

The US dollar has had a mixed week as traders try to second guess whether the so-called 'fiscal cliff' situation can be resolved by the January 1st deadline. The lack of resolve has damaged US consumer confidence with figures released yesterday showing a much greater drop than was expected. The President appears to be pushing for an interim deal to be struck to avoid the wave of tax reforms being implemented which many economists fear will push the US back into recession. Data released yesterday showed that the number of new people claiming unemployment related benefits rose by less than expected which is a good sign for the labour market in general. Housing data released showed that the number of new homes sold last month rose by less than was anticipated; but, prices had increased by more than expected. There is more housing data out today in the form of pending home sales and the market will hope for a more positive reading. Call in now to see how the markets will react with the impending fiscal cliff edging ever nearer.

Worldwide

Elsewhere, the Japanese yen's movements have been well documented this week, continuing to weaken against all of its major peers whilst dropping to a 2 year low against the US dollar. Inflation data showed that the price of services purchased by corporations had deflated by 0.4%, whilst minutes from the latest Bank of Japan Monetary policy meeting revealed that the central bank will look to continue to loosen monetary policy with no specific end date in mind. Commodity backed currencies have also struggled towards the back end of the week as risk aversion increased due to the fears surrounding the US fiscal cliff situation. Call in now to see if the Japanese yen will continue to depreciate.