The euro is still suffering from the negative impact of a rating downgrade given to Portugal. Sterling continued to find some support after the CIPS PMI services survey, which beat market forecasts.

Sterling

CIPS PMI service sector survey came in above expectations and helped lend support to sterling. The data suggests that the service industry could be bottoming. BRC retail prices showed in its survey prices jumping last month to their highest levels since October 2008. The increase was largely due to a pick up in food prices. While upward prices pressures will upset some MPC members at the Bank of England, employment figures will offset some of the concern over prices.

US dollar

The US dollar was supported after factory orders were released below market expectations, but still at a healthy 0.8 per cent gain on the month. The dollar made gains as the euro suffered at the hands of Moody’s rating agency, which downgraded Portugal’s sovereign debt rating but the dollar’s upside is limited until more is learned about the debt ceiling negotiations that are still underway on Capitol Hill.

Euro

Moody’s rating agency gave warning to European banks that could suffer losses should plans for rolling over Greek debt continue. The rating agency also downgraded Portugal’s sovereign debt rating by four notches, sending it to ‘junk’ status. Moody’s said that it believed that Portugal would need a second bailout, since it has not been able to access the debt markets since its government was thrown out in April.

Japanese yen

The Japanese yen is making gains alongside the Swiss franc as investors hunt out safe havens. The flow into the yen picked up after the Moody’s downgrade of Portuguese debt rating. The gains come despite a gain in the Nikkei, which is up for the seventh consecutive day.

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

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