Daily currency report
The US dollar finally advanced against the euro after falling to nine-month lows last week as US employment conditions improved beyond expectations propelling the dollar upwards. Sovereign debt concerns in peripheral eurozone nations have come back to haunt the euro which has added further momentum to the single currency’s decline. Despite a rise in UK producer price inflation, sterling could not push on from nine-month highs against the US dollar and, along with the euro, begins the week on the back foot although markedly higher against the single currency itself.
Sterling dipped from recent highs particularly against the US dollar. Better than expected US jobs data made it difficult for the pound to push on from nine-month highs against the greenback. Data from Friday revealed producer price inflation in October jumped by 0.6 per cent, above the forecasted 0.2 per cent increase. The hotter than expected price data adds to already above target consumer price inflation in the UK.
Although the US dollar is expected to remain under pressure from recent quantitative easing, and on expectations that US interest rates will remain low for some time, robust payrolls data revived hope for the US economy.
The euro has fallen back after peaking at fresh nine-month highs against the US dollar last week. Excellent US jobs data has renewed interest in the US currency while concerns about peripheral eurozone countries have come back to haunt the euro. Investors are demanding extra yield to buy Ireland’s debt and its spread, when compared to Germany, has more than doubled over the past few months.
The Bank of Japan announced no unexpected policy changes after bringing forward its November meeting. There were fears that the Japanese central bank could take emergency action if the yen rallied in the aftermath of the US Federal Reserve pumping more money into the US economy.
Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/