Daily currency report
Sterling fell to a three-week low against a broadly firmer dollar as growing concerns about a stuttering global economic recovery encouraged investors to seek refuge in safe haven currencies. The pound, however, did come close to a seven-week high...
Sterling fell to a three-week low against a broadly firmer dollar as growing concerns about a stuttering global economic recovery encouraged investors to seek refuge in safe haven currencies. The pound, however, did come close to a seven-week high against the euro after comments made by the European Central Bank’s Alex Weber indicated an extension to current loose monetary policy. These comments also encouraged investors in short dollar positions to take profit, nudging the greenback to hit a five-week high against the single currency. Safe haven currencies such as the Japanese yen and Swiss franc continued to remain in demand, with the franc approaching record highs against the euro. The US dollar also firmed on safe haven demand as fears of the global recovery’s slowdown triggered a wave of risk aversion.
Sterling
Sterling rose against the euro coming close to a seven-week high. The rise came as comments from a senior European Central Bank official raised expectations the bank will keep monetary conditions in the eurozone loose for some time. Its gains versus the single currency helped sterling’s trade-weighted index edge up to 82.8, its strongest level this year.
US dollar
The dollar saw relatively tight ranges traded against most major currencies as investors lacked inspiration from data as well as event risk. The dollar saw mild gains after investors began to re-evaluate their bearish sentiment on the outlook for the US economy. A bounce in industrial output helped to spark the move, which turned out to be short-lived.
Euro
The euro came under broad selling pressure after comments from a European Central Bank member. ECB Governing Council member Axel Weber said the bank was likely to extend unlimited liquidity to banks past the end of the year. This increased speculation that interest rates for the eurozone would remain low going into 2011, weakening the single currency. As a result, the euro fell particularly hard against its British counterpart. The single currency also fell on the back of widespread risk aversion on concerns about the global economic recovery.
Japanese yen
The Japanese yen rose to a 15-year high against the US dollar as Japanese investors continued to pile into US government debt contributing to a sharp fall in yields. The gains against the greenback supported the currency against other major crosses.
Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/