Daily currency report

The euro’s rally is in danger of collapse after eurozone finance ministers rejected the latest plan to save Greece from default. Demands from private bond-holders were declared unsustainable by both Greek and European officials at a meeting in Brussels where leaders were supposed to promote the region’s new anti-crisis plans. However, the Greek saga is having minimal effect on Europe’s other debt-strapped nations such as Italy which is keeping the euro close to its multi-week highs against both the US dollar and British pound. Sterling remains under pressure in front of the release of UK growth statistics, and public borrowing data. Combined, both figures may perhaps remind investors of Britain’s dangerous mixture of low growth and high debt. Despite several negative headlines, including geo-political tensions between the US and Iran; the safe haven US dollar failed to impress. The yen weakened after the Bank of Japan made no changes to its policy which helped allay concerns of more yen-devaluing intervention.

Sterling

The prospect of more currency-devaluing quantitative easing kept the pound under pressure against its main rivals. Sterling closed the day 1.1 per cent lower than its high versus the euro and fell close to a two-month low against the Swiss franc.

US dollar

Under normal circumstances, the US dollar may have soared to new highs after eurozone finance ministers rejected the latest plan to save Greece from default. However, the US Federal Reserve will begin its two-day monetary policy meeting and the announcement is keeping investors on-guard for potential surprises.

Euro

The euro marched towards three-week highs against the US dollar despite news Greece has failed to reach a sustainable solution with its creditors. Athens must force Greek bond-holders to accept significant losses and lower yields before it can receive any more money from its international lenders. Following eurozone ministers’ decision to snub the latest offer, efforts to shore up Greece are beginning to overshadow Europe’s wider anti-crisis plans. Although positively, the drama does not appear to be spilling over into other nations such as Italy, for now. That relief helped prop up the single currency however, traders may grow cautious in front of data which is likely to point towards more interest rate cuts from the European Central Bank.

Japanese yen

The Japanese yen weakened further after the Bank of Japan made no changes to monetary policy and, crucially, introduced no new measures aimed at devaluing the Japanese yen.

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