Daily currency report

On a quiet day in terms of data releases, sterling traded in relatively tight trading ranges despite weaker than expected house price data. The US dollar is taking a breather after a strong run up in last week’s session while fears of a failed Portuguese bond auction are keeping the single currency under pressure.

Sterling

Sterling traded in relatively tight trading ranges despite weaker than expected house price data. Halifax said that its house price survey declined 1.3 per cent month on month in December. The slip in house prices is followed by news from the BRC that retail sales for December slipped -0.3 per cent year on year. Furthermore, a survey on Q4 growth in the UK by the British Chamber of Commerce fell sharply.

US dollar

The US dollar has been placed in a holding pattern against most of its crosses after coming a long way higher in a short time. There is very little on the agenda to propel the move as investors seem prepared to sit and wait until the Portuguese bond auction.

Euro

Jean-Claude Trichet made comments on emerging and world markets, but did not offer any insight as to what the European Central Bank will discuss when it meets this week. His comments also failed to offer any support for the Portuguese situation as spreads between Portuguese and German bond yields eased as investors speculated over the degree in which the ECB intervened.

Japanese yen

The Japanese market reopened, allowing the government the opportunity to make comments on euro bond purchases. The yen suffered after the government said that it would buy about a fifth of the bonds that will be offered by the European Financial Stability Facility that will go on sale later.

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