Daily currency report

Confidence-boosting US unemployment data has had very little lasting impact on currency markets that have opened on shaky ground. The US dollar and other safe havens had tumbled during last week’s final session following data showing the overall jobless rate in the US suddenly dropping close to four-year lows in September. The euro and other more risky currencies subsequently stepped over a weakened US dollar but are back under pressure after the World Bank warned that China’s economy is slowing sharply; reminding investors of a gloomy world economic picture while traders already appear to be feeling less than confident about seeing more progress in Europe. Eurozone leaders are gathering this week and financial markets should remain very sensitive to any news on Spain and Greece as governments continue to stall on taking the European Central Bank’s crisis-fighting efforts forward.

Sterling

The pound is beginning to show real signs of strain again. Sterling is trading close to three-week lows against the euro after the European Central Bank last week dismissed another interest rate cut, while local PMI surveys pointed towards looser UK monetary policy.

US dollar

The US dollar has made a surprisingly strong start, putting Friday’s non-farm frenzy to one side as traders react to news on China. The World Bank has warned that the slowdown in China’s economy could accelerate. This is putting global growth worries back on the front page, and allowing the safe haven US dollar to press higher again. The global growth story could develop further this week with the International Monetary Fund also set to announce its most up-to-date forecasts while eurozone leaders will also meet to discuss the debt crisis.

Euro

Confidence-boosting US unemployment data gifted the euro another pick up against the majors, but the pressure is back on again with investors perhaps feeling cautious before key meetings this week. The single currency is already down on last week’s fresh two-week highs against the US dollar as eurozone finance ministers gather over the next two days. Leaders are expected to put forward new efforts on setting up a banking union across Europe and also discuss what impact Spain’s uncertainty may have on financial markets.

Japanese yen

A fragile open in currency markets has given the yen a better start than last week’s finish where the refuge yen was sent sharply lower following some risk-boosting US economic data on Friday. The Japanese currency should now align itself with the US dollar and hope that unfinished fiscal troubles in both Spain and Greece help promote some more safety plays.