Comments from officials on the euro’s strength or weakness may be the only thing to sway trade with little else on the agenda in terms of data. On the other hand, Spain and France will be auctioning off debt and are expected to see strong demand. If this is the case and Government borrowing costs are held down, the euro could experience some reinvigorated upside. In the US, the Federal Reserve Beige Book report and economic data all revealed a recovering economy, but there are signs that investors are becoming frustrated with politics in Washington. The price to insure against Government default is slowly creeping higher and no matter how good the current figures are the threat of Government default and unknown spending cuts are weighing on sentiment.

Sterling

Sterling opens back under pressure from a rising US dollar and remains near nine-month lows against the euro. There is no data on agenda, but BoE’s Tucker is scheduled to speak. He will be speaking on financial sector reforms and bank lending. There is also a gilt auction, but sterling is more likely to continue following developments in euro/dollar then set out on its own accord.

US dollar

According to the Federal Reserve Beige Book, all 12 US districts expanded nicely. A builder sentiment survey fell for the first time since April, but that is after touching a 6.5 year high last month, so a little pull back is easily forgiven.

Industrial output rose 0.3 per cent, which was in line with market expectations and confirms a growing economy. CPI was flat, giving no indication that the Federal Reserve needed to worry about a tighter policy. As for figures, they are all expected to show improvement in the jobs market, housing sector, etc. But who can think on a recovering economy, when a debt ceiling and unknown spending cuts stand in the way?

Euro

Investors continue to keep one eye on Washington as deadlock over spending cuts and negotiations over raising the debt ceiling increases anxiety on nearly an hourly basis. Some distraction might be provided by a Spanish and French bond auction. Should Government borrowing costs continue to be held low, some momentum could be added to the single currency’s upside potential. Outside of the bond auctions there is very little to look forward to in the eurozone.