Smart Daily Currency Note | Poor data from the Euro zone doesn't help sterling

Sterling

Sterling struggled again yesterday dropping to a near one month low against the dollar, and continuing its decline against the yen as increased risk appetite lent support to the so called safe haven currencies. Continued market worries about the threat of a UK triple dip recession also undermined sterling. With the spotlight on the UK's economic health, today's Trade Balance data takes on a greater importance than it might normally do. The gap between import and export values is expected to close somewhat after disappointing results last month. If it exceeds expectation we are likely to see sterling rally a bit. Get in touch for the most up to date price, and the latest news. 

Euro

The euro struggled yesterday, giving back the advancements made earlier in the week. This resulted in the euro slipping back below the 1.310 mark against the USD.  A raft of poor middle tier data was released including retail sales figures falling short of the markets expectations posting a monthly increase of only 0.1%, German factory orders fell by 1.8% when a 1.4% drop had been anticipated and rumours spread that France could potentially have its credit rating further downgraded. Most damning though to the state of the Eurozone economy as a whole was the data released showed that the Eurozone unemployment rate had reached 11.8% - a record high - with 18.8 million people unemployed across the Eurozone. With the outlook of the euro regions looking increasingly bleak, the currency may weaken further as the week progresses. The focus will remain upon whether or not the European Central Bank (ECB) will decide to cut interest rates by 0.25%; but, the general consensus is still that the ECB will still hold rates at 0.75%. Industrial Production data will be released from Germany today alongside the Euro-area wide final GDP figures  which are expected to show the Eurozone remains in a recession with a figure of  -0.1%. To find out how the general outlook of the euro zone will affect the euro, call your trader now for a market update and a live quote.

US dollar

The US dollar performed well yesterday as risk aversion dominated the market, partly due to the message from the Bipartisan Policy Centre which said the US government will struggle to pay its bills by mid-February meaning there is  less time to solve this problem than many realise. Little important data released today implies the market may stay stable; however, history shows that the currency of the world's largest economy generally strengthens in January and February following a US election and this has been true to date. Crude oil inventories and a benchmark 10-year bond auction is the only data out of note in what is otherwise a quiet day for the US. Get in touch now for the latest news and rates.

Worldwide

Elsewhere, as risk appetite diminished and traders sold off Japanese yen positions to consolidate profits we saw the Japanese yen stage a small rally, strengthening against most of its counter parts . New Prime Minister Abe is expected to undertake a broad swathe of stimulus measures designed to bolster the economy, but the recent recovery indicates that traders think that has already been priced into the market. The Swedish krona was the worst performing currency yesterday struggling against all the majors as Decembers central banks minutes revealed it may look to cut interest rate again in the near future. After recent gains based on increased commodity prices, Australian dollar weakened on the back of a larger than expected trade deficit - the largest since 2008. The weakness looks set to continue as markets wait on news of a possible cut in interest rates. Conversely, rumours have been spreading that the Reserve Bank of New Zealand could look to raise interest rates in the near term. The Canadian dollar also ended a three day upward trend due to decreasing oil prices - the country's main export - and decreasing risk appetite dragged down prices. Retail sales data from Australia was released over night and over the coming days we will see Trade balance data from China be released. Call in now for the latest news and rates.