Speculation is slowly circulating, suggesting that Portugal is being pushed to seek emergency help after the premium paid by Spain and Portugal in order to attract investors continued to rise, reaching a new record. As contagion spreads from Ireland and eurozone officials clash over increasing their funding for debt burdened peripheral member nations, the euro continues to come under significant pressure. The euro fell towards two-month lows against the resurgent US dollar as the greenback managed to advance on the back of investors who are increasingly becoming more risk averse. This momentum is hurting the British pound which fell back towards one-month lows against its US counterpart despite encouraging UK retail sales figure. The Australian dollar is under pressure after falling sharply on comments from Reserve Bank of Australia Governor Glenn Stevens who ruled out the possibility of raising interest rates anytime soon. The yen is becoming a little less favourable compared to other safe haven rivals given Japan’s exposure to ongoing tensions in the Korean peninsula. The Swiss franc is also facing pressure from the US dollar fell to nine-week lows and back under parity, with more losses to follow.
Sterling
Sterling fell back towards one-month lows against the US dollar as investors remain alert to eurozone peripheral debt.
US dollar
The US Thanksgiving holiday got underway which thinned liquidity and helped dampen currency market activity. There was no local data, however, the greenback still found support as investors continue to flee the euro and Asian currencies on peripheral debt concerns as tensions in the Korean peninsula grow.
Euro
European leaders met to discuss expanding its emergency bailout fund which was made available for struggling member nations earlier this year. The issue now is that the fund, reportedly worth €750 billion, is backed by eurozone countries themselves, so if more nations apply for help, then others will be forced to offer more support. The key contributor is Germany, the zone’s largest economy and right now they are strongly apposing the idea and feel the group should stick to what was agreed. Tensions are mounting as Germany grows more frustrated with being asked to bailout countries who have been borrowing recklessly for years. However, European Cental Bank membel, Axel Weber, reiterated his support which allowed the euro to post modest gains before eventually giving way to more pressure.
Japanese yen
Japan’s core consumer price inflation, which strips out volatile factors, fell for the 20th month in a row as deflationary pressures mount on the Japanese economy. The stronger yen is also helping to import cheaper prices and the news will add further pressure on the Bank of Japan.
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