Daily currency report

The US dollar continues to find support despite the weaker than expected non-farm payrolls report that was released at the close of last week. Expectations for a strong payrolls report were elevated, but disappointment in the release of 103k new jobs added to the economy was offset by a large drop in the unemployment rate to 9.4 per cent. The Bank of England and European Central Bank will meet this week to discuss their monetary policy. Traditionally the meetings were this week’s main focus, but with debt markets still in crisis across Europe, a Portuguese offering could overshadow this week’s policy meetings. Markets in Japan were closed for a public holiday, leaving overnight trading relatively quiet.

Sterling

Sterling continues to benefit from turmoil in European debt markets; the havoc has allowed the pound to open at four-month highs against the euro.

US Dollar

The US dollar continues its uptrend from last week despite the disappointing non-farm payrolls data that was released on Friday. In comments following the employment news, Ben Bernanke said that the US economic recovery was on track, but was insufficient to reduce the rate of unemployment significantly. On an upbeat note, Mr Bernanke also said that the recovery appears to be self sustaining, but that it could take 4-5 years for jobs to recovery.

Euro

Jean-Claude Trichet, scheduled to speak, is sure to try to calm debt markets that saw a gauge, which monitors how much it costs to insure against a basket of EU 15 debt, move to record highs recently. Rattled debt markets are likely to overshadow the ECB rate setting meeting. The debt fell under pressure after the Swiss National Bank confirmed that it had stopped accepting Portuguese debt as collateral. Spain and Italy will also hold bond auctions this week.

Japanese Yen

The Japanese yen moved higher against some crosses with markets there closed for a market holiday.

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