Liquidity will be thin in the European trading session with many markets closed for a public holiday. The holiday and weaker than expected US, euro zone and UK economic data released prompted speculators to take a risk-off approach to trade. Subsequently the safe haven Swiss franc shot to fresh record highs against the US dollar and euro. Sterling suffered a set back on soft manufacturing figures. A survey of the sector dropped to levels not seen in 20-months. A construction PMI survey is due out, but with equity markets expected to tumble at the start, trade in currency markets might already be looking risk averse. In such trade, the yen and Swiss franc tend to benefit, while the euro and commodity currencies tend to suffer losses. In the US, weekly jobless claims will be released prior to factor orders.

Sterling

Sterling tumbled after weak economic data was released. A PMI manufacturing survey fell to 20-month lows, while data from the Bank of England showed that mortgage approvals dropped to lows not seen since December 2010.

US dollar

The US dollar fell to one month lows on a trade weighted index, before taking back some of its losses in the session. The ADP employment report fell to 8-month lows while the ISM manufacturing report came in at 20-month lows. The economic data supports the view that the pace of growth is slowing in the US.

Euro

The euro has battled the headlines recently, which seem to change with every passing minute. Whether Greece is bailed out or not is the question. It appears that the country will receive some form of help. Estimates suggest that the country needs an additional €60 billion over and above last year’s bailout in order to cover expenses for the next two years. Uncertainty remains over whether the tiff between Germany and the European Central Bank will or will not include ‘re-profiling’ in the new bailout agreement.

Japanese yen

The Japanese yen saw an extremely quiet session, despite the vote of no-confidence for Prime Minister Kan. Kan said that he was ready to step down after only one year at the helm, but would do so only after crisis-related work has been completed. The deal struck with his own party allowed him to win the vote of no-confidence and has bought him a few more months in power.

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

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