Weak commodity and equity markets allowed the dollar some respite as investors became slightly risk averse in front of the Bank of England and European Central Bank monetary policy meetings as well as the US non-farm payrolls data. The central banks meetings are expected to leave interest rates on hold but offer diverging outlooks on monetary policy. The pound dropped quickly to a one week low, while the euro touched one-year highs against sterling. Markets widely expect the figures of the US non-farm payrolls date to highlight growth in the jobs market and any disappointment in this regard could further weigh on the US dollar. With commodity prices falling, currencies such as the Norwegian krona, Canadian, Aussie and New Zealand dollars are coming under some selling pressure. Japanese markets remain closed for a public holiday.
Sterling
The pound dropped to one week lows, while sterling fell under heavy selling pressure against a rising euro. The move came after a CIPS PMI manufacturing survey touched a seven-month low. The drop in the release as well as a bleak outlook in the new orders component supported the view that the central bank would hold off on any anticipated rate increase until later this year or maybe even in 2012.
US dollar
While there are a couple of event risks on the calendar of market events, it is more likely to be another day of “hurry up and wait”. With the exception of sterling, trade was rather lacklustre. The US dollar continued to remain in relatively tight ranges against the euro, while succumbing to new record lows against the Swiss franc. The dollar moved to one-week highs against sterling after the release of a weak manufacturing survey in the UK.
Euro
The euro received more support after the release of euro zone €78 billion passed through the markets with little reaction.
Japanese yen
The Japanese yen continues to experience thin trading sessions as markets are closed for public holidays.
Travelex Global Business Payments Malta, freephone: 800 733 22, www.travelex.com/mt/