Reports that Vodafone is about to announce one of the biggest mergers and acquisitions deals ever has sent sterling racing towards two-month highs against the euro, with the deal underlining optimism about an economic recovery. The US dollar is trading at one-month highs against the yen as well as a currency basket ahead of Friday’s US non-farm payrolls report which is expected to prove pivotal in the Federal Reserve’s monetary policy decision on stimulus later this month. Revised GDP data will also be on the agenda for the euro this week with the single currency under pressure and down near six-week lows against the US dollar before Thursday’s European Central Bank announcement. The euro is also struggling to attract risk-seeking traders amid turmoil in Syria although the threat of an immediate military strike by the US seems to be receding. Nevertheless, the Syrian risk is likely to continue disrupting trading activity this week while investors also study several important economic data releases and central bank decisions from around the globe.
Sterling
The British pound surged to near two-month highs against the euro as reports that Vodafone could be ready to announce one of the biggest corporate deals ever bolsters optimism about Britain’s economic recovery. A possible $130bn sale could provide the economy with additional stimulus. Investors are also expecting to see UK manufacturing PMI survey to show another acceleration of growth in the sector to underline the broadness of the economy’s recovery. The pound could end the week under pressure with analysts anticipating mixed UK manufacturing and industrial output data on Friday before critical US unemployment figures are released which may boost the US dollar.
Euro
The euro has fallen to six-week lows against the US dollar and is trading near eight-week lows against sterling as investors remain cautious about more risky currencies amid fears the US will soon take military action against Syria. The single currency could bounce back in the days ahead though.
US dollar
US markets will be closed were a national holiday but the US dollar kept rising towards one-month highs against the Japanese yen after US President Barack Obama announced that he will seek support from Congress on the Syrian crisis in what could be a sign that the US may not take direct military action. The greenback is also exchanging hands at one-month peaks against a currency basket ahead of this week’s critical US labour market data.