In an emergency decree, the Italian Prime Minister announced that his government would put in place €30 billion worth of austerity measures. Markets are likely to react favourably to the announcement.

Sterling

CIPS PMI construction survey reached a five-month high in October, but then slowed to 52.3 in November. The data suggests that the pace of construction is slowing, but still in expansion territory. Investors are looking for more quantitative easing measures to be delivered early next year.

US dollar

The economic data released in the helped to weaken the US dollar, since the demand for a safe haven by investors weakened. Non-farm payrolls were released more or less in line with forecast at 120k. The increase in payrolls puts the economy on an improved growth outlook. Not only did last month’s payrolls data come out in line with forecasts, but the figures from the prior two months were also revised higher. However, the biggest headline was the drop in the rate of unemployment. The rate of unemployment fell to 8.6 per cent, which was the lowest level since 2009. The decline in the rate from nine per cent looked encouraging at first, but upon closer inspection may not be as inspiring to investors looking for good news as half of the decline in the rate of unemployment was related to people falling out of the labour markets all together.

Euro

US Treasury Secretary is in and will be holding discussions with several Finance Ministers. His role in the crisis has taken on new meaning since the decision by central banks to provide US dollar liquidity. While the additional liquidity will not fix the crisis, it has done two things. First it gave a huge psychological boost to markets and second it showed to the world that not only do central banks communicate closely, but they have decided to do what they can to support the eurozone project.

Japanese yen

The Japanese yen is once again seeing safe haven gains. The yen has moved higher as the rally in US equity markets fizzled. Equity markets across are mixed and uncertainty over this week’s outlook has prompted investors to take flight into the yen.

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

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