Smart Daily Currency Note | Low volumes, lots of data, plenty of opportunity for rapid changes in rates

Sterling

Sterling enjoyed a more positive day on Friday, recovering some of the losses seen earlier in the week. Despite Tuesdays bank holiday for New Year's Day, there is quite a lot of data released this week including the influential Purchasing Managers' Index (PMI) figures which come out from the manufacturing, construction and services sectors on consecutive days. We also have housing data, information on the supply of money and the net lending to individuals; furthermore, the Bank of England will release its findings from a survey regarding the current credit conditions in the UK.  Trading volumes across the global markets will remain extremely low with bank holidays from different nations spread across the first 4 days of the week; so, expect volatility to remain high and price moves to be over-exaggerated. Call in now to speak to your trader.

Euro

The euro struggled on Friday as preliminary readings suggest that the Eurozone economy contracted in the final quarter of 2012, this would be the third quarter in a row. The 10-year Italian bond auction was fairly well received, with yields only slightly higher on the benchmark note. Other data released showed that French consumer spending grew by 0.2% when a flat 0.0% reading had been anticipated; however, French third quarter GDP estimates are down to 0.1% from the 0.2% estimate in November. It should be a quiet start to the week for Europe; but, later on we have some key data released including euro area wide services and manufacturing PMI figures, unemployment data from a number of counties including Spain, inflation data and German retail sales figures will also be announced. Get in touch now to get the most up to date price.

US dollar

The US dollar faired relatively well on Friday as the markets grew nervous that no deal has been sorted to avoid the so-called fiscal cliff. The President has also now admitted that a failure to resolve the fiscal-cliff situation would hurt the financial markets. Developments over the weekend suggest that there is now a greater chance of a deal being struck that will prevent tax hikes automatically coming into effect from January 1st. Much better than expected housing data was released on Friday revealing that there are 1.7% more homes pending sale compared to last month when a 0.3% drop had been anticipated. This week we will see a lot of data released including manufacturing and non-manufacturing PMI data. We will also have the minutes from the latest monetary policy committee meeting of the Federal Open Market Committee where they announced that it will continue to keep monetary policy loose until the labour market shows significant signs of recovery. There is also a raft of employment related data released this week, culminating with the highly influential Non-farm employment data released on Friday. Get in touch now for a live price and to see if the US can avoid tumbling off the so-called fiscal cliff.

Worldwide

Elsewhere, the Japanese yen continued to come under pressure on Friday as traders speculate that the Bank of Japan will look to loosen monetary policy in the short term. Chinese manufacturing PMI data will be released today and on Tuesday; furthermore, there will be Canadian unemployment and inflation data released. It will be interesting to see how the Japanese yen fairs this week after last week's poor showing, as Japan enjoys 4 days of bank holidays on Monday through Thursday. Call in now to get a live price and a market update.