A generally cautious mood in financial markets dictated trading activity, keeping most major currency pairs confined to familiar price levels. Yet there were enough headlines to stir business such as Standard & Poor’s decision to lower Greece’s credit rating to “selective default” which could easily have triggered a euro sell-off. The US dollar would have been the most obvious beneficiary of such a move, and even more so after US pending home sales data topped expectations. Surprisingly the Japanese yen did see some movement, but in its favour this time, ending a record breaking losing streak after data on local retail sales beat market forecasts. Most investors remained on the sidelines though in anticipation of some big events later this week such as the European Central Bank cheap-loans auction for banks that could lift risk appetite.
Sterling
The Confederation of British Industry February’s report should give markets decent insight into the health of the British consumer, and how much consumer spending will contribute to economic growth this quarter. The data on retail activity will keep investors on edge though after the previous month’s gauge unexpectedly fell to its lowest level since March 2009.
US dollar
The US dollar steadied as a generally cautious mood in financial markets was soothed by US pending home sales data which outstripped expectations. Concerns Greece will still face difficulty convincing all private investors to accept losses of over 50 per cent on their Greek bonds kept traders in close contact with the defensive US dollar.
Euro
Chancellor Angela Merkel warned Germany that forcing Greece out of the eurozone would be an “incalculable” detrimental blow before securing enough votes in parliament in favour of Athens’ €130 billion loan. However, rating agency Standard & Poor’s set up a nerve-racking day in currency markets after it lowered Greece’s credit rating to “selective default”, raising fears a default at some point is inevitable. Nonetheless, investors will study a selection of eurozone indicators which are forecast to paint a slightly more optimistic picture of economic strength.
Japanese yen
The Japanese yen ended a record breaking losing streak against its rivals, which began earlier this month, after data on local retail sales blew away market forecasts.
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