The euro rallied against the dollar this morning while the pound pared its declines as stocks rebounded after Abu Dhabi pledged to bail out Dubai. The yen has also made considerable gains after the Tankan index of confidence among Japanese manufacturers increased.
Pound Sterling – UK Markets
The pound has rebounded from its slide against the dollar last week to trade at 1.627. News of Dubai’s bail out eased the dollar broadly which boosted sterling slightly.
However, the pounds gains are limited due to lingering concerns over the UK’s fiscal health and consumer data released later today could put more pressure on the currency.
US Dollar – US Markets
The dollar eased 0.3% against a basket of major currencies after Dubai said it had received USD10 billion from fellow UAE member Abu Dhabi, cooling fears of a potential debt default that have rattled global financial markets.
This helped to bolster appetite for riskier and higher-yielding currencies and as a result the greenback lost gains made last week.
Euro – European Markets
The euro climbed to USD1.467 after the Dubai government said Abu Dhabi would provide USD10 billion to help state-owned Dubai World meet its obligations.
This resulted in a 0.4% advancement in the MSCI world index of shares which has strengthened the single currency.
Other Currencies – Highlights
The yen advanced most against Taiwan and Australia’s dollar after the Tankan report, rising 0.9% and 0.7%, respectively.
The Japanese currency is poised to replace the dollar as the chief funding currency for investments in cities after borrowing from Japan became almost as cheap as US loans for the first time in four months.