Strong demand and lower borrowing costs at bond auctions in both and helped dampen concerns eurozone nations will find financial support difficult to come by after recent rating downgrades.

Sterling

The pound endured another mixed performance, edging higher against the safe haven US dollar and yen, whilst losing further ground against rivals offering a higher rate of interest such as the Swedish Kroner. Stability in European bond markets encouraged equity and currency traders to maintain a bullish rally. As a result, sterling also finds itself at its lowest point since December 30 versus the euro. The pound has failed to keep pace after another string of local fundamentals elevated fears the economy is heading towards recession.

US dollar

The US dollar’s trade weighted index, which measures its performance against a basket of its most-traded peers, has fallen again. Right now, confidence in the euro is fast-improving which is helping to temper demand for the refuge dollar. The greenback weakened further after data showing the biggest improvement in weekly jobless claims since September 2005.

Euro

In spite of Standard & Poor’s mass credit downgrades for a number of eurozone sovereigns, government borrowing costs have continued to fall and drew strong demand at auctions which helped bring down yields on long-term bonds. Relative calm in debt markets has provided a major boost for risk sentiment and confidence in the single currency. Traders, who had become excessively bearish on the euro’s outlook, are now cautiously topping up their euro accounts helped also by talk of more International Monetary Fund assistance for the eurozone.

Japanese yen

The Japanese yen fell across the board on, and through key psychological trading levels against the euro after another day of improved investor morale. Traders dumped the yen in favour of the single currency after both and were able to lower borrowing costs, thus damping concerns eurozone countries will find it difficult to raise finance in 2012.

Travelex Global Business Payments Malta. (Free phone: 800 733 22) www.travelex.com/mt/

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