The rising euro kept sterling under pressure despite another solid number on UK construction activity which suggests that the UK recovery is on track. The safe haven US dollar suffered the most as stock markets climbed and another batch of healthy US data prompted investors to dump the greenback in favour of riskier assets.

Sterling

Sterling continues to suffer from broader market activity despite healthy expansion in another key sector of the UK economy. CIPS November construction PMI showed activity growing from the previous level of 51.6 to 51.8, defying expectations of a small decline and providing further evidence that the recovery is on the right track.

US dollar

The US dollar was broadly under pressure after positive news from both home and abroad encouraged investors to resume with riskier trades, subsequently weighing on the greenback’s appeal as a refuge. US weekly jobless claims rose but still remained near two-year lows and pending home sales in October jumped by an astonishing 10.4 per cent on the month.

Euro

After holding rates as expected at one per cent, European Central Bank president Jean-Claude Trichet disappointed markets with a measured approach to the emergency, placing the onus on eurozone governments to collectively up their responsibilities. The euro immediately tumbled against the US dollar before later recovering on news that the European Central Bank was in fact aggressively buying up peripheral eurozone debt.

Japanese yen

The yen held firm as threats across Asia kept the Japanese currency in demand from cautious investors seeking shelter. China again announced its intent to tighten monetary policy which is likely to sap the region’s growth, and North Korea signalled that it was stepping up preparations for war.

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