US markets rally
Currency rates for the pound and euro have gained ground this morning after a rally in US markets led to a rise in risk appetite internationally. The Bank of England and ECB both signaled they would look to reign in stimulus packages in future and this led the euro and pound higher overnight. US unemployment figures are due today.
Pound Sterling – UK Markets
Sterling currency rates are higher against the US dollar and euro this morning, after global equities rallied overnight and the Bank of England decided to maintain current QE levels. The pound has risen against all its major currency partners, touching 1.66 against the greenback and 1.11 against the euro.
Sterling rose in response to the news that the MPC will slow the rate of bond purchases, and the euro climbed after the ECB also noted that they would work to withdraw extra liquidity from global markets. The FTSE also rose overnight after profits at Tesco rose and US markets responded well to better than expected production figures. The producer price index is due in the UK today.
US Dollar – US Markets
The greenback is trading at slightly weaker levels this morning after a rally in international markets led to a rise in risk appetite. The US dollar is currently trading in the region of 0.67 against the euro and 0.60 against the pound.
Business productivity in the US has risen at the fastest rate in six years, sending US equity markets higher overnight and fuelling risk appetite in the market. Non-farm productivity rose to 9.5%, up from 6.6% the previous quarter while jobless claims fell by more than expected. The Dow Jones rallied the most it has since July, rising 2% on the back of the news. Average hourly earnings figures and the unemployment rate are due in the US today and this could be a source of more market volatility.
Euro – European Markets
The euro rose overnight after the ECB voted to leave interest rates unchanged, gaining against the US dollar and Japanese yen, as well as most of its European currency partners. The euro is currently trading around 1.48 to the US dollar and 0.89 to the pound.
ECB President Trichet helped the euro to rise yesterday after commenting that the ECB would look to gradually unwind their fiscal stimulus packages. While the withdrawal of stimulus is regarded as risky, it is also essential to prevent new asset bubbles forming in the global economy. Today in the eurozone the Swiss unemployment rate and German factory orders are due.
Other Currencies – Highlights
The Australian dollar rose overnight as the RBA predicted that the economy will rise at a faster pace than predicted in August, and Australia will continue to lead the world with interest rate rises. Investment lending figures for Australia are due early next week.
The Canadian currency has reached its highest level in a week against the US dollar after the rally in US markets led investors to diversify their currency reserves. With the US being Canada's biggest currency partner, a recovery in US markets bodes well for the Canadian economy. Canadian unemployment figures are due today.