Daily currency report

There was very little data on the global calendar except for Nationwide’s consumer confidence survey for November. The dire figures gained more traction than normal, sending the pound crashing to three-month lows against a strong US dollar. Contagion spreading from Ireland to other members is fast becoming a strong possibility after eurozone officials, meeting in Brussels last week, again failed to come up with any new measures which could help address the market’s lack of confidence in euro area government debt. Those fears led to another sharp drop in the single currency, which fell to another new all-time low against the in-demand Swiss franc. The so-called “Swissie” remains a favourite among investors seeking refuge from global risks, a move which is also being accelerated by traditional end of year risk aversion. For the same reason, rival safe haven currencies US dollar and Japanese yen also found support although the greenback produced more noteworthy gains as the US economic recovery solidifies, possibly allowing the Fed to scale back its $600 billion quantitative easing plan.

Sterling

Consumer morale plunged to its lowest level since March 2009, confirming fears that the UK government’s spending plans are already starting to bite. Retail sales were seen slowing last week and confidence data does not bode well for future demand.

US dollar

The dollar reached two-week highs on the euro and more surprisingly, three-month highs against sterling after thin year end trading volumes favoured the greenback.

Euro

The single currency fell by over one per cent during trade against both the yen and US dollar and again reached new all-time lows against the Swiss franc. Markets are increasingly favouring safer assets over the euro right now as the area’s sovereign debt crisis shows no signs of abating.

Japanese yen

The Bank of Japan will come together over the next two days for their December policy meeting and since interest rates cannot go any lower, markets will look for news on the central bank’s stimulus programme. The recent introduction of a five trillion yen asset purchasing fund could easily be expanded given a string of terrible Japanese data releases.

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