Daily currency report
Sterling opens up at well-supported levels albeit slightly lower levels due to limited economic data on the calendar so far this week. The main drive in the market is still conflict with regards to who will win next month's general election and, in particular, political uncertainty surrounding a hung Parliament result. The euro traded near a three-month low against the pound, mainly on concern that the European Union led €45 billion aid package for Greece will not stop the deficit crisis from spreading. The euro eased off its session highs against the US dollar on the news. The greenback had a mixed start this week with traders looking ahead to a barrage of economic reports due out later in the week.
The local currency remained stable due to lack of local economic data. Oil giant BP announced that their first quarter profits had doubled from a year ago. Although demand for oil has remained relatively weak, the price of oil has been boosted by optimism over the recovery in the global economy and speculation by traders.
The US dollar came off its session highs overnight but was still broadly supported by mounting sovereign credit risk in the eurozone. Data was light with building permits for March the only data of note. Permits actually fell, giving traders another excuse to hold safe haven positions in the US dollar.
The demand for Europe's currency weakened before Greek transport workers go on strike and after German Chancellor Angela Merkel said she won't release funds for Greece until the nation has a "sustainable" plan to reduce its shortfall. News that the austerity measures that some European countries are demanding from Greece, in return for financial assistance, could lead to up to one million unemployed in the debt riddled nation.
The yen traded within technical ranges, which was to be expected, due to the lack of market data in most territories. Still all eyes will be focused on the Bank of Japan meeting later in the week. In the run-up to the policy committee's meeting, the yen should remain supported due to the safe haven flows into the economy on the back of financial and political uncertainty in Europe.