Sterling’s short-term advance on the US dollar is expected to be tested as investors again gear up for an up-to-date snapshot of the eurozone crisis. Finland approved changes to the European Financial Stability Facility which were agreed to in principle last July. Next up is Germany and although German politicians are expected to pass the vote, there is growing discontent among lawmakers who appose offering more taxpayers money as a guarantee to help support failing nations such as Greece. Uncertainty is likely to keep investors short of risk-taking although US Federal Reserve Chairman Ben Bernanke talked up more monetary easing which has helped improve global sentiment.
Sterling
Sterling was confined to fairly tight ranges in major crosses while traders seem to be stuck in what appears to be “wait and see mode”. There were no significant moves to report, leaving the pound comfortably higher than last week’s 11-month and all-time low against the US dollar and Japanese yen respectively.
US dollar
News from the US did little to quell suspicions that the world’s largest economy is heading for another hard fall. Durable goods orders fell sharply while comments from Federal Reserve chairman Ben Bernanke once more advocated that added monetary easing is under review. Surprisingly though, Bernanke again shifted focus back on inflation as apposed to unemployment and growth concerns which may have been a tactic aimed at easing market fears.
Euro
There was relatively little change to the euro’s overall picture. The common currency has secured noteworthy gains against its key counterparts since last week’s shocking plunge in financial assets. Yet the euro still remains insight of low’s recently breached such as 10-year troughs versus the yen.
Japanese yen
Anyone with an interest in the Japanese yen will be on high alert for possible intervention action, none more so than Japanese authorities. German lawmakers are expected to vote on changes to the eurozone’s bail out fund and in the unlikely event of failure to pass new measures, demand for the yen would surely surge to new record highs.
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