The US dollar continues to be sold on more US quantitative easing expectations and the euro remains as the preferred alternative for investors right now.

Sterling

The outlook for the UK economy deteriorated even further after data showed demand for UK exports fell for the first time in over a year. CIPS manufacturing PMI for September fell to 53.4, below forecasts of 53.8. The index fell to 10-month lows and as a result sterling touched new four-month troughs against the euro. Recent talk that the UK’s quantitative easing program may be restarted has kept the pound under pressure.

US dollar

The US dollar extended recent losses falling to over six-month lows against the euro. The US dollar’s trade weighted index also fell to January lows. Comments from Federal Reserve member, William Dudley, almost certainly confirmed that more quantitative easing was required. Core PCE inflation levels for August revealed that price pressures remain weak. The ISM manufacturing index for September showed activity declining slightly faster than expected.

Euro

The euro has set new record high levels despite ongoing peripheral government debt concerns. Spain saw its credit rating downgraded as investors remain concerned over whether weaker eurozone nations will be able to continue successfully funding public debt. However, data from the 16-member bloc showed that the eurozone economy is performing relatively better than rivals. September’s manufacturing PMI fell to multi-month lows but not as steeply as forecasters had expected.

Japanese yen

The Japanese yen came under selling pressure. Monthly wages failed to rise for the first time in six months which does not bode well for future consumer demand. This follows on from CPI data which showed prices falling and there is a strong possibility that the Bank of Japan will increase stimulus measures in response.

Commercial Foreign Exchange Travelex Malta, free phone: 800 733 22, www.travelex.com/mt/