Smart Daily Currency Note | The euro finishes the week on a high

Sterling

A difficult week for sterling as it weakened off against the euro and the higher yielding currencies. It did strengthen against the US dollar and Japanese yen as risk appetite was a key driver in the market. A raft of better than expected employment data did help support sterling. Data released showed that full-time hiring had reached a one and a half year high, unemployment benefit claimants actually fell by 3,000 in the last 3 months when a 5,900 increase had been anticipated and the overall unemployment rate stayed at 7.8% when a marginal increase had been expected. Sterling struggled yesterday however, as a report showed the majority of U.K. manufacturers are seeing a decline in orders. This in conjunction with the fear that the Bank of England will resume quantitative easing and the news that Standard and Poor's (one of the big three credit rating agencies) had put a negative outlook on the UK's AAA credit rating pushed sterling weaker against the majority of its major peers. With very little data out today, we don't anticipate much volatility, but we are in the run up to Christmas where trading volumes are low and rates can change quickly so get in touch for up to the second pricing.

Euro

The euro performed well this week reaching  1.31 against the US dollar following German economic sentiment data coming out better than expected and news of monetary easing in the US. Positive results from a Spanish and Italian bond auction also helped support the euro as did news that Greece has finally had the next tranche of its bailout fund approved. At the Economic Union where ministers sought for deeper economic and monetary integration, yesterday a decision was made to appoint a common banking supervisor. The most influential data released today will be the Manufacturing and Services Purchase Manager Index (PMI) figures across Europe. Should these come in lower than forecast, expect the euro to lose some of its gains this week and slide against its major trading partners. Call in now to see how this has affected the market, and to get a live price.

US dollar

It has been a broadly poor week for the dollar as the fast approaching Fiscal Cliff has weighed heavily in the minds of traders. A resolution must be reached by the end of next week as the Christmas period interrupts proceedings after that. The Federal Reserve (the American equivalent of the Bank of England) announcement of an increase in asset purchasing by $45 billion a month, a third round of quantitative easing, also hit prices in the middle of the week. Today the most influential data release is on inflation, and as trading volumes decrease in the run up to the break, expect increased volatility in pricing. Get in touch now for the most up to date rates. 

Worldwide

Elsewhere it was a difficult week for the Japanese yen, consistently losing ground versus its major trading peers as expectations of a loosening of monetary policy dampened demand for the currency; seeing it fall to 19 and 9-month lows versus sterling and the US dollar respectively. One of the surprise movers early in the week was the Swiss franc, losing ground versus the euro as UBS followed Credit Suisse in announcing that they will start charging clients on accounts which hold francs. It was also a difficult week for the South African rand, failing to capitalise on last week's advances, as news that gold and mining production had fallen significantly across the nation. Other key data out this week saw the Canadian trade balance come out better than expected, helping the currency rise to an eight-week high versus its US partner. Today sees very little data released so call in now to get a live price.