Risk appetite is weak as investors remain stranded by developing crises on both sides of the Atlantic. Safe haven currencies, such as the yen and Swiss franc, have been the obvious winners, while gold has also reached a fresh record high. In the US, debate continues to go on over deficit reduction measures, while a back up plan to raise the debt ceiling by the August 2 deadline is hammered out in the Senate. In the eurozone, negotiations over a second bailout package for Greece will begin in earnest this Thursday when leaders gather for an emergency summit. In the UK, there is a lack of economic data or event risk until this Wednesday when markets will view the release of the Bank of England’s MPC minutes.

Sterling

The pound for the next couple of days will be forced to trade alongside euro/dollar developments. There is a lack of economic data and event risk with the next major event for sterling markets will be the release of the Bank of England MPC minutes.

US dollar

Dollar gains continue to be limited as investors continue to cautiously eye the budget negotiations between the House Republicans and the Senate Democrats. In addition to the continued impasse, economic data has been less than comforting.

Euro

The stress tests released at the close of business last week showed that eight out of 90 banks failed. Already details of the test are being criticized by investors who are saying that they were not stringent enough. While attention on the stress tests will continue to remain in focus, the bigger focus for this week will be the emergency summit on Thursday for a second Greek bailout. The summit will bring all members together to try to hammer out a deal. At the same time, investor confidence will be measured when Spain is set to auction off more debt. Fears of contagion remain high for larger countries such as Italy and Spain, who continue to have to pay a higher and nearly unsustainable price to attract investors to take their debt.

Japanese yen

Despite markets being closed for a public holiday, the yen continued to see support. The gains were made on the back of risk aversion flow. Equity markets across Asia are mixed, but opening calls for European equity markets are for a lower start.

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

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