Major currency crosses remained in tight trading ranges. The euro managed to take back some of the losses when ECB’s Jean-Claude Trichet reminded investors of next week’s looming interest rate increase. The comment came after ruling parties in France and Germany lost ground in local elections over the weekend. In the UK, markets will turn their attention to final fourth quarter GDP revisions. Any downward revision to the data could weigh heavily on sterling. In the US, economic data released supported the view that the recovery remains on track and that the FOMC could begin to think about ending its Quantitative easing 2 programme by this summer.

Sterling

Sterling could face some selling pressure if economic data surprises markets to the downside of expectations. The final release of Q4 GDP data is expected to show that the economy contracted 0.6 per cent on the quarter, but a downward revision could weigh on the Pound.

US Dollar

The US dollar lost a little ground in late trade, but when one looks at overnight per cent changes it is clear that markets are facing this week’s event risks with a certain degree of calm.

Euro

The euro’s resilience is almost uncanny. Ruling parties in Germany and France lost ground in local elections over the weekend and yet the euro saw only moderate losses. Hawkish comments from Mr Trichet allowed the euro to take back any small losses it had seen earlier. Looking forward, the single currency’s resilience will be tested some more this week starting with economic data released in Germany.

Japanese Yen

The rate of unemployment in February dropped to 4.6 per cent. Retail sales held steady at 0.1 per cent, while household spending declined 0.2 per cent. The economic data has had little impact on the yen, which continues to be controlled by intervention policies of the G7. There has been talk that the Japanese government may consider nationalising Japan’s largest energy company, TESCO, after traces of plutonium have been found in the soil surrounding the damaged plant. The upcoming Tankan survey may just give markets some insight as to how bad the triple disaster has impacted business sentiment.

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

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