The US dollar tumbled across the board as investors focused on the other side of the US tax cut debate. Although higher US growth and lower unemployment could be among the chief benefits of proposed US tax cuts, the controversial measure could also worsen the US’s already precarious fiscal position. As a result, the euro found some relief, further supported by the European Central Bank reportedly still aggressively buying up peripheral eurozone debt. The single currency advanced by over one per cent on the day against sterling, with the pound also suffering from more weak UK housing data.

Sterling

Sterling fell sharply as markets focused on weak UK housing data, with little else on the global calendar to catch their attention. Thin trading heading into the Christmas break also exaggerated the move, however focus will quickly shift to inflation data which could provide some support for the pound.

US dollar

The US dollar took a broad beating, flirting with three week lows against the euro and sterling, as investors focused on the other side of the US tax cut debate. Although higher US growth and lower unemployment could be among the chief benefits of proposed US tax cuts, the controversial measure could also worsen the US’s already precarious fiscal position. Underscoring those concerns, ratings agency Moody’s warned that the passage of the tax cut plan could result in a downgrade to the outlook for US debt, and put its coveted AAA rating in jeopardy.

Euro

The euro managed significant gains against rivals, the US dollar in particular, as attention shifted to US monetary policy. Investors are also becoming hopeful of some significant developments later this week which could prove pivotal for the future of the single currency area.

Japanese yen

The yen jumped by over one per cent on the day against the US dollar, as attention shifted back on US tax cuts and its negative long term impact as highlighted by rating agency Moody’s. However, locally there was more doom and gloom after November’s consumer confidence survey posted a disappointing decline.

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

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