Risk appetite in the market has improved this morning after US jobless claims reached a 10-month low, sending the greenback near 15-month lows against the euro and Australian dollar. This morning the pound has benefited from the rise in risk appetite and the German economy has recorded 0.7% growth in the third quarter.

Pound Sterling – UK Markets

Sterling exchange rates have gained ground this morning, rising against its major currency partners after a low key week. The pound is currently valued at 1.66 against the US dollar and in the region of 1.11 against the euro.

The pound has recovered the 1% lost against the euro yesterday as a degree of confidence returns to foreign exchange markets. Sterling suffered this week as dovish comments from Bank of England Governor Mervyn King led to speculation that more QE could take place in future and low inflation is expected to keep interest rates low throughout 2010. Today is light for UK data with markets likely to be interested in news from the eurozone.

US Dollar – US Markets

Exchange rates for the US dollar are slightly weaker this morning, trending downwards slightly against its major currency partners including the pound and euro. The greenback is currently valued in the region of 0.67 and 0.60 against the euro and pound respectively.

The greenback reached an intra-week low against the pound yesterday after sterling sentiment weakened and dipped to a 15-month low against the Aussie dollar after Australia added jobs to the economy in October. US initial jobless claims have dipped to a 10-month low and this is fuelling risk appetite at present. Today the trade balance figures are due in the US and these are expected to widen as demand for imports increases as the country rebounds from recession.

Euro – European Markets

Exchange rates for the euro are slightly weaker this morning against the higher yielding currencies, falling against the pound, Aussie and Kiwi currencies as risk appetite receives a boost in the market.

Yesterday the single currency also neared a 15-month high against the greenback as US jobless claims fell to their lowest level in 10 months. This triggered a round of risk appetite and the euro continues to benefit from USD and JPY diversification. Germany's economy expanded 0.7% in the third quarter, leading economists to predict regional growth for the third quarter will be in the region of 0.5%. The figures released today are likely to affect euro exchange rates.

Other Currencies – Highlights

Exchange rates for the Canadian currency reached a three-week low against the US dollar as the price of gold declined, and commodities dropped on international markets. The loonie weakened 1% to the region of 1.05 against the US dollar ahead of Canadian new motor vehicle sales and the US import price index due today.

The Aussie and Kiwi currencies have both risen for the second consecutive week against the US dollar after positive data from their economies. Australia recorded jobs rises in October, with 24,500 jobs added to the economy while New Zealand house prices have rebounded in October.