Pound Sterling - UK Markets

The Pound has held its ground against the Dollar overnight, trading at 1.42 this morning and up to 1.07 against the Euro. Sterling has also gained against its major currency partners, up over 1% on the Yen and stronger against the Asia-Pacific currencies. 

Yesterday the CBI Distributive Trends survey showed a 3 point fall in expected sales, the lowest since 1983 and Lord Mandelson offered £2.3 billion for the ailing British car industry. The return of market confidence has led to a rally for the Pound in the absence of major UK data out this week. An IMF economic update due today will confirm recession is a growing phenomenon throughout the world. The combination of this and the WEF meeting is likely to impact on market sentiment in some form. There is no data from the UK today with mortgage approvals and consumer credit figures out on Friday.

US Dollar - US Markets

Upward market trends have seen the US Dollar decline overnight in favour of some of the higher yielding currencies. The Pound, European and Australasian currencies have all posted gains on the Dollar as investors venture out from the shelter of safe havens.

The post-economic crisis financial world will be high on the agenda in Davos as bankers and politicians attempt to map a route to recovery this week. Business confidence has taken a massive hit in recent months and recovery is expected to take 3 years. The Washington Post Survey released yesterday indicated US consumer confidence has fallen to record lows. Oil has stalled in the $45 a barrel region as declining economic figures dampen demand for the commodity. The FOMC meeting is likely to focus on credit easing, yet implications for the future are unknown. Interest rates, usually a primary gauge of a currencies value may be replaced as economists will no longer be able to make predictions based on interest rate policy. The FOMC interest rate decision will be announced this afternoon.

Euro - European Markets

The Euro is broadly stronger this morning, gaining against its North American and Asian currency partners on the back of recent market strength. The Euro has declined against the Pound to 0.93 and is trading at 1.32 versus the Dollar.

Redundancies continue to make headlines across the Eurozone with SAP, the German based business software company cutting more than 3000 jobs this year. A survey of German consumer sentiment shows outlook remains unchanged this month, aided by lower inflation levels. French consumer confidence is also up despite the deteriorating industry outlook. German Consumer Price index is due today in an otherwise light day for data from the Eurozone.

Other Currencies - Highlights

The Australian and New Zealand Dollars strengthened overnight, gaining from the international increase in risk appetite after a few days of market stability. The Yen has also depreciated from recent highs as risk appetite returns. Australian consumer price index, Japanese retail sales figures and the RBNZ interest rate decision are due today.