The euro’s fall accelerated as the single currency hit fresh 10-month lows against the US dollar and a new nine- month low versus sterling. Driving the currency lower was the fact that Italy was forced to offer a record 6.5 per cent yield on 10-year bonds as well as ongoing concerns over the eurozone’s growth prospects and overall solvency. Furthermore, some analysts are now beginning to speculate that the agreements reached over fiscal union last Friday could unravel as certain member states have hinted that the accords may have to be ratified by their own Parliaments. Elsewhere, there was more bad news from the UK where unemployment hit its highest level since 1994.

Sterling

Sterling rose against the euro but slid further against the US dollar as investors continued to dump the single currency. However, sterling’s gains were capped by dismal unemployment numbers which hit 2.64 million. The data has also fuelled speculation that the UK could be sliding back into recession and raised question marks over the government’s strategy to reduce the budget deficit.

US dollar

The greenback is at 11-month highs against the euro as the dollar continues to benefit from the flight to safety as the eurozone debt crisis rumbles and economic data released in China and Japan disappointed investors.

Euro

Investors continued to punish the single currency forcing the euro to fresh multi month lows against both the US dollar and the pound. Central to the currency’s woes is the fact there is still no plan on the table to address the ongoing issues of solvency and lack of growth, particularly in the South European economies.

Japanese yen

The Japanese yen once again strengthened even though the Bank of Japan’s Tankan survey showed business sentiment falling to -5 from +4 in the fourth quarter. The weaker economic data out of Japan, coupled with soft manufacturing figures in China, helped to erode investor sentiment but provided some support for the yen, given the yen’s safe haven appeal as a store of long term value.

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

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