The euro stabilised following assurances from European leaders that investors will be protected if Ireland is forced to seek emergency help. Prior to this, the euro had continued to tumble, hitting a six-week trough against the resurgent US dollar. Safe haven flows and improving local data continued to increase the greenback’s allure as it recovers from the US Fed’s recent quantitative easing boost. Sterling faced pressure from profit taking but has recovered to within touching distance of almost two-month highs against the euro.

Sterling

The UK’s exposure to the failing Irish economy was enough reason for investors to book profit on sterling’s recent ascent. As a result the pound found itself under a little pressure at the end of last week. However, sterling has managed to recover and is still within touching distance of seven-week highs against the euro.

US dollar

The US dollar remains in demand on both domestic and broader market factors. Key support for the greenback is coming from safe haven flows as European jitters continue to drive investors away from riskier, higher yielding currencies, particularly the euro. The US dollar is also enjoying better levels against commodity linked currencies.

Euro

The euro stabilised following assurances from European leaders that if things turn sour and Ireland are forced to seek emergency help, investors will be protected. Prior to this, the euro had continued to tumble, falling to six-week troughs against the resurgent US dollar. Disappointing eurozone data gave investors further incentive to dump the single currency. A preliminary reading of Q3 GDP showed the eurozone economy growing by 0.4 per cent from Q2 and by 1.9 per cent on the year. Unfortunately for the euro area, strong growth from economies such as Germany was offset by contraction in countries such as Greece.

Japanese yen

The Japanese yen’s relationship with the US dollar dominated currency markets in Q3 with the yen’s rise to 15-year highs hurting Japanese exports which are vital to its recovery. A stronger yen also helps import cheaper foreign goods which have been adding to the country’s deflationary problems. The yen is now trading at over one-month lows as the US dollar continues its recovery.

Travelex Global Business Payments Malta, freephone: 800 733 22, www.travelex.com/mt/

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