The US dollar surged to new highs and may continue to snap resistant points against its major rivals with ease, after Japan reported dire GDP figures to give global growth worries a new edge, and while conditions in Europe look set to worsen in the coming days. The US currency closed at fresh two-month highs against the euro ahead of a meeting in Europe which could raise even more concerns about the Greek crisis. The single currency’s woes could then escalate from there if GDP numbers confirm the eurozone is back in recession and will continue to contract into next year. Sterling is therefore facing substantial pressure from a rising US dollar and will be hoping that Bank of England inflation reports help to put something of a floor under its recent slide towards two-month lows.

Sterling

Sterling is heading towards two-month lows against the US dollar following dire Japanese GDP data that has stoked demand for the safest option in currency markets. Fears of a recession in Europe and a eurozone exit for Greece are also weighing on the British pound. Question marks about the sustainability of Britain’s economic recovery are also growing quickly but a Bank of England quarterly inflation report may just help relieve some of those concerns.

US dollar

The US dollar surged against the euro, pound and the Japanese yen after investors closed the week with only safety in mind as European economic and fiscal threats flare once more. What’s more, heavy realisation that the fiscal cliff debate has only just begun, and could go down to the wire, may keep traders locked into US dollar positions for now.

Euro

The euro suffered new two-month lows against the US dollar and the shared currency’s despairs could easily escalate ahead of GDP data that is forecast to show the eurozone economy falling back into recession. The figures should serve as a much stronger notice to traders that Europe is failing to contain the debt crisis and this could potentially open up the euro to another wave of selling pressure. However, even before growth numbers, the euro will have to scrap through the meeting between euro area finance chiefs as they attempt to break the deadlock on financing for Greece.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.