Daily currency report
Sterling was scrutinised after a poll showed a growing risk no party will win an outright majority in the upcoming election which created fears as a 'hung' parliament is perceived to be less able to reduce the UK's mounting debt.
The pound sank to a ten month low against the dollar and a three month low against the euro as political unrest and the possibility of further credit easing by the Bank of England totally crucified the currency.
The dollar was strengthened versus a basket of its major rivals as moderating stocks and commodities revived the dollar's safe-haven allure. Nervousness surrounding an expected upcoming British Election and lingering worries about Greece's debt put the dollar in the spot light. Economic releases in the States were mixed including US Personal Income, which rose 0.1 per cent month on month in January and US Personal Spending, which rose by 0.5 per cent.
The euro dropped as a heavy sell-off of the pound spooked currency markets, prompting a knee-jerk drop in the single currency against the dollar. Conflicting headlines out of the eurozone regarding German aid to indebted Greece drove the euro's direction. Even though near-term support to Greece from the EU is on the horizon, its longer term upside should remain severely limited by the prospect for similar scenarios arising in other EU countries such as Italy, Spain, Portugal and Ireland
The yen continued to come under selling pressure despite upbeat jobs data. On the macroeconomic front, Japanese unemployment rate dropped in January to 4.9 per cent from the 5.1 per cent rate in December, against market expectations to remain unchanged. Furthermore, news about merger activities has added to risk appetite, as investors took them as a signal of confidence among big companies.