Daily currency report

The impact of intervention that was coordinated between six major central banks this week, which helped to lower funding costs has faded somewhat. Risk appetite remains upbeat, however. The smooth auctions of Spanish and French debt has helped to sustain the more upbeat environment, which was also supported by strong US economic data. As a result, currency markets continue to see the selling of safe haven assets in favour of riskier currencies such as the euro, CEE and commodity currencies. In Switzerland, the Swiss franc came under renewed selling pressure after reports suggested that the Swiss National Bank was discussing ways in which to impose negative interest rates.

Sterling

CIPS PMI manufacturing survey released fell below last month’s 28-month low. The survey showed the sector contracting further at 47.6 in November. Looking closer at the survey, there was some good news in the new orders component that showed the pace of contraction in decline. However, 4weak demand conditions supported by job losses threaten the outlook for future surveys.

US dollar

The economic data in the US has beat market expectations all week. Markets are getting used to good news, which sets investors up for disappointment should non-farm payrolls fail to come out at least in line with forecast. The improved US economic data combined with the coordinated action on Wednesday by six major central banks to boost US dollar liquidity has increased risk appetite which has weighed on the US dollar and other safe haven currencies.

Euro

The final PMI figures were left unrevised and markets continued to cheer after France and Spain announced that they were able to raise the amount of capital required at a bond auction. The smooth auctions coupled with one held earlier in the week in Italy has helped to lift risk appetite for the euro.

Japanese yen

The Japanese yen inched higher against most major crosses as improved investor sentiment began to dry up in the Asian session.

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