Markets were expected to remain subdued as investors minimise risky moves ahead of the US Federal Open Market Committee’s uncertain announcement. Monday’s surprise rate hike in Australia helped trigger demand for riskier assets which allowed the Australian dollar to post new 28-year highs against the US dollar. The euro also managed to firm against rival currencies after the eurozone’s manufacturing sector was seen expanding last month. In stark contrast, sterling fell after October’s UK construction sector PMI fell to eight-months lows which reignited talk of quantitative easing.

Sterling

Sterling rebounded sharply after disappointing construction data dampened recent optimism which came from Q3 growth figures. October’s CIPS construction PMI dipped surprisingly from September’s 53.8 to 51.6 which was also considerably below forecasts. Sterling suffered as the news re-ignited speculation that the Bank of England may be forced to further stimulate a flagging UK economy.

US dollar

The US dollar did manage modest gains, but is still broadly under pressure as investors remain uncertain on where to position themselves. The US Federal Open Market Committee, which is the Federal Reserve’s rate setting group, began their two day policy meeting and results are expected soon.

Euro

Despite expectations of a quiet days trading ahead of the US FOMC monetary policy announcement, the euro rose above key levels against the US dollar. Upbeat investor sentiment on the back of higher equity markets and positive eurozone data provided the single currency with support.

Japanese yen

The yen fell sharply against a rising euro but remains dangerously close to 15-year highs against the US dollar. With no significant data scheduled this week, the yen, along with most other major currencies, will likely find direction after the US FOMC announce their next move on monetary policy.

Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/

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