Daily currency report

Overview

The Swiss franc jumped to September 2011 peaks against the euro on speculation the Swiss National Bank may be about to relax its extraordinary peg against the euro. Swiss intervention saw the US dollar emerge as a more favourable haven from eurozone debt risks and the greenback immediately fell against the Alpine currency. Otherwise, trade in currency markets was rather subdued even after a meeting between France and Germany suggested Greece is again in danger of missing out on further financial aid. The meeting in Berlin did however imply that a deal on fiscal unity, designed to promote confidence in eurozone government debt, could be in place by as early as March.

Sterling

Sterling may receive a lift after another set of UK fundamentals painted an improving outlook for the British economy.

US dollar

The US dollar edged lower, pressured by a sharp fall against the Swiss franc following the shock resignation of the Swiss National Bank Chairman, Philipp Hildebrand. The Swiss National Bank’s head was the architect behind Switzerland’s currency manipulation in 2011 which led to the US dollar taking over from the franc as arguably the most popular choice of safe harbour currencies.

Euro

The euro steadied against its key rivals even after a meeting in Berlin between France and Germany offered markets nothing significantly new in terms of Europe’s debt fighting plans. Leaders did ramp up the pressure on Greece though, with rhetoric from German Chancellor, Angela Merkel, suggesting Greece is again in danger of not receiving further financial aid. Still, the bigger picture remains unchanged with the euro down at record lows against the higher yielding currencies of both Australia and New Zealand. Investors are almost certain the European Central Bank will need to consider further stimulus measures in order to safeguard the region from a recession.

Japanese yen

Japanese authorities, still desperately seeking ways to bolster export growth through a weaker currency will have looked on in disappointment at events. A meeting between France and Germany offered very little reason for traders to reverse defensive moves which led the yen to another record high against the euro.

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

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