Asian equity markets continue to decline, which means that safe haven currencies such as the US dollar, yen and Swiss franc could see some further gains. There is a real lack of event risk or even economic data on the agenda, which will leave investors trading on sentiment.

Sterling

The highlight this week in the UK will be the second release of GDP data for the second quarter. The GDP figures are likely to remain unchanged and investors will also look to CBI industrial trends and distributive trades surveys as they try to determine the strength of Q3 growth.

US dollar

An empty calendar of events will get markets off to a slow start. In fact, looking ahead to this week it is hard to see what event risk or data will inspire trade outside of this Friday’s gathering in Jackson Hole, Wyoming. Investors will be watching closely comments from this year’s gathering to see whether or not the Fed will head down the path of Quantitative Easing 3. This expectation could help to cap dollar gains for most of the week.

Euro

There have been several comments from Germany’s Finance Minister and a European Central Bank member. The comments have offset movements in currency markets. Germany’s Finance Minister said his outlook for the German economy remains upbeat and that last week’s weaker-than-expected Q2 GDP release has not altered his outlook for three per cent growth this year. The comments would have been euro supportive, but that European Central Bank’s Nowotny came out with downbeat comments over the outlook for the EFSF. He said that he did not see the eurozone states able to adopt EFSF revisions by the end of October.

Japanese yen

The yen reached fresh record highs against the US dollar in overnight trade. The flight to safe havens supported the move into the yen as Asian equity markets continued to trade in red territory. The move prompted comments from the Finance Minister as well as the Prime Minister, who said they were watching developments in currency markets carefully.

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

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