The US dollar has made a weak start, suggesting that investors are feeling a little more hopeful about January’s potential US fiscal cliff after Washington described debt talks as “constructive”. Nevertheless, escalating tensions in the Middle East, as well as worries ahead of a decision on Greece’s bailout could keep the greenback near recent 10-week highs against a currency basket. Eurozone finance chiefs will gather to deal with uncertainty regarding Greece’s bailout. This is likely to be the centre of the markets attention with the US closed for Thanksgiving and therefore offering no top-tier economic data releases. There should be no let-up for sterling either ahead of Bank of England minutes. The notes are anticipated to keep growing debate about extra money-printing moving, after the bank’s Governor warned that the UK economy is still in danger of a relapse.

Sterling

The pound achieved a late recovery and starts slightly better placed as investors continue to react to earlier data confirming the eurozone’s second recession in four years. Focus on Europe’s latest summit start could also give sterling another opportunity to attract investors looking to step out of the euro area ahead of a decision on Greece’s bailout. But this opening for the pound to recover could prove momentary if Bank of England minutes pump up worries the central bank is still debating expanding quantitative easing measures.

US dollar

The US dollar is looking somewhat uneasy, with investors perhaps looking to unload some of their defensive assets after Washington described talks on dealing with January’s US fiscal cliff as “constructive”. Nonetheless, the greenback still remains well supported after a number of global risks continued to weigh on risk-taking sentiment, sending the safe haven US dollar to 10-week highs against a basket of currencies.

Euro

The euro headed back towards its recent two-month lows against the US dollar, and investors may force the currency lower in front of the important PMI surveys which are forecast to show that Europe’s economic slump will probably deepen over the fourth quarter. Data confirmed a third quarter contraction across the 17-member area, marking the start of a long-anticipated recession. Euro area finance ministers will hold a meeting and a decision on whether Greece has done enough to warrant extra funding is expected.

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.