Smart Daily Currency Note | Euros strengthens, US dollar weakens

Sterling

During the course of yesterday sterling reached a three month high against the US dollar peaking at 1.6307; but, dropped to a two month low of 1.2240 against the euro. The Monetary Policy Committee meeting minutes revealed the members voted 8-1 against an increase in quantitative easing with one member voting for a £25 billion increase as risks from the Eurozone crisis is easing and inflation danger is persisting. The Bank of England did say however that the strength of the pound had been damaging the UK economy, which led some to believe the central bank is eyeing up another round of quantitate easing in an attempt to weaken sterling and boost exports. As expected, all members of the MPC voted to keep interest rates on hold at 0.5 per cent. Key data released today will be the monthly report on UK retail sales. As always, this will provide us with an early look at consumer spending levels in the run up to Christmas, and in turn a good idea of the overall economic activity in the UK, so call in and find out which way will this has influenced sterling today.

Euro

The euro strengthened yesterday and reached an eight month high against the US dollar of 1.3307 based on positive data from Germany. Europe's largest economy looks set to overcome recent troubles as German business sentiment again beat expectations. This was accompanied by positive thoughts regarding Greek debts across the Eurozone resulting. There is not much data out of Europe today and although we have seen some weakness for the euro overnight against both the US dollar and sterling, the euro's recent strength has seen it pushing key resistance levels against major currency partners. We will have to see if it can break through and if so, how far it can go. Call in now for the latest update and a live rate.

US dollar

After the US dollar was sold off through much of the day, dropping to multi month lows against both sterling and the euro, some strength returned in the afternoon as key resistance levels were not broken. The Fiscal Cliff continues to dominate both the political and economic landscape, but President Obama said in the late afternoon that he was optimistic about reaching a deal, despite threatening to veto the speaker's proposition. As noted yesterday we wait to see if the dollar follows recent trends when on hitting a low it quickly reverses the trend, gaining on occasion up to ten cents. This suggestion could be supported if today's unemployment data continues the positive trend of the last few months. Get in touch now to book in the high rates while they last.

Worldwide

Elsewhere, the Japanese yen continued to weaken yesterday, dropping to a one and a half year low against sterling ahead of the Bank of Japan's (BoJ) last interest rate decision for 2012. The New Zealand Dollar weakened after whole-milk (a major export of NZ) prices fell for a fourth-straight auction showing a moderation in the nation's growth. The Australian dollar also declined for a third day against the USD, following worries that the nation's economy is slowing with further interest rate cuts anticipated by the central bank. In addition to the Bank of Japan's (BoJ) last interest rate decision, overnight we will also see the release of New Zealand GDP and today we have Business Confidence data released. Later on today, the main release will be the Canadian Core Retail Sales figures. Call in now for the latest news and updates.