Daily currency report

Currency markets are off to a positive start after politicians in Greece voted in favour of an even more unforgiving austerity package which is expected to finally satisfy European leaders and the International Monetary Fund and secure its second €130 billion emergency loan. As a result, the euro remains within touching distance of two-month highs versus the US dollar. The greenback is therefore likely to stay under pressure as investors continue to favour more risky bets. The dollar’s safe haven rival, the Japanese yen, is under an even darker cloud after growth figures slipped more than forecast.

Sterling

The pound is set for another busy week with investors ready to scrutinise a selection of key UK economic fundamentals to gauge whether or not last week’s Bank of England £50 billion injection will be enough to turn the economy around. Policymakers voted in favour of more stimulus as slips towards recession and the possibility of additional monetary easing pressured the pound to fresh 2012 lows against the euro.

US dollar

US President Barack Obama will present his 2013 budget proposal designed to reign in the nation’s enormous deficit that had led to the being stripped of its top credit rating by Standard & Poor’s. Though significant, the announcement may do little to influence currency markets which continue to be driven by headlines out of Greece.

Euro

The euro is expected to strengthen after Greek politicians voted in favour of an improved austerity package which should satisfy the demands of its international lenders and secure its next €130 billion emergency bailout. Stand-in Prime Minister, Lucas Papedemos, who was tasked with securing ’s next crisis loan, won a convincing majority in parliament despite widespread riots and arson attacks across over the weekend. ’s initial austerity pledge was turned away by eurozone officials last week and politicians were warned they must find further spending cuts, and prove the program will be made into law, before can qualify for anymore funding.

Japanese yen

The Japanese yen tumbled across the board after fourth quarter growth figures slipped more than analysts had expected. Japan’s economy, still in recovery from last year’s earthquake disaster, shrank 0.6 per cent, in the period between October and December.

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