European leaders made two key announcements which initially eased pressure on the euro, however, the single currency is back under heavy pressure. A rescue deal for Ireland was agreed and the aid package was confirmed to be €67.5 billion, way short of the amount Greece acquired earlier this year.

However, as Spanish stock markets tumble, it seems as though contagion may have already spread to other peripheral eurozone nations and as a result the Irish deal has so far done little to encourage investors. The single currency remains under attack for now, tumbling to new two-month lows against the US dollar and the current negative sentiment is also weighing on the pound. Sterling has fallen to nine-month lows as investors become increasingly more risk adverse due to the UK’s exposure to Irish debt. Safe haven flows have benefited the US dollar the most as the greenback reclaims it role as the primary safe haven currency, pressuring rivals such as the yen and Swiss franc.

Sterling

Sterling has fallen incredibly to new nine-week lows against the US dollar as investors’ mood darkens even further. The pound is also under significant pressure from other safe haven currencies such as the yen and Swiss franc as markets step up risk aversion.

US dollar

The US dollar has advanced across the board since as the currency reclaimed its role as the primary safe haven currency. The greenback seems to again be the ultimate refuge for investors fleeing risk and there could be more to come as eurozone debt risks and tensions in the Korean peninsula rumble on.

Euro

European finance ministers finally agreed to a €67.5 billion bailout for the troubled Irish economy and for the very first time, developed a new blueprint for future rescue deals. Ireland’s package comes after several days of negotiations and the agreement is hoped to ease pressure on both Portugal and Spain. The euro initially rose on the news but soon tumbled to fresh two-month lows against the US dollar, yen and Swiss franc. Markets fear that the deal has come too late and the problem has already spread.

Japanese yen

The yen is still within touching distance of nine-week highs against the euro as markets continue to unwind risky positions and favour safe currencies such as the yen.

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

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