Sterling fell broadly with investors still nervous ahead of upcoming UK unemployment data whilst generally careful trading weighed on riskier assets. A stronger US dollar was another factor behind the pound’s weakness with the pound falling to fresh six-week lows as upbeat US employment data continued to induce dollar-buying. Also taking advantage of the weaker pound, the euro edged toward a two week high as eurozone finance ministers gave Greece’s second bailout a final approval having been satisfied by last week’s record-breaking bond swap.

Sterling

A mood of caution settled over currency markets and a real lack of risk appetite weighed on the British pound which fell to its lowest level since January 25 against the US dollar. The decline was a continuation of Friday’s momentum where the dollar dictated trading activity on the back of more robust US employment statistics. That strain also put pressure on sterling in other crosses, most notably against the euro where technical factors played a part in creating some volatility.

US dollar

The US dollar is set to take centre stage as global investors gear up for the Federal Reserve monetary policy announcement. No change in current measures or interest rates is forecast but markets will pay close attention to the accompanying statement for clues on the Federal Reserve’s stimulus program. The dollar’s sharp rise to over three-week highs against a currency basket suggests investors are expecting central bankers to rule out anymore cash injections into the US economy.

Euro

The euro took advantage of a broadly weaker pound and edged towards two-week highs after eurozone finance ministers gave their final authorization on Greece’s second bailout. Athens completed a relatively smooth bond exchange with its private investors that reduced an enormous amount of the nation’s debt burden which was a precondition for more funding. However, optimism Greece will now avoid bankruptcy could be short-lived after finance ministers also turned the heat up on Spain where sky-high unemployment is damaging the government’s fiscal health.

Japanese yen

The yen steadied following its recent slide against the US dollar to a 10½ -month low after the Bank of Japan made no changes to its asset-buying stimulus program.

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

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