Pound Sterling - UK Markets

Sterling exchange rates are mixed this morning, rising against the US dollar, yen and South African rand while falling against the euro, Australian and New Zealand currencies. The pound is currently trading at 1.59 against the greenback and 1.09 against the euro.

The pound remains under pressure as risk aversion runs high in the market, despite Nationwide figures on Friday showing that UK house prices rose in September for the fifth consecutive month. Weak labour market figures in the US last week led to a spike in risk aversion, sending exchange rates for the higher yielding currencies lower due to fears over the sustainability of the recent market rally. This morning a CBI survey has noted that business increased by 7% in the three months to September, while the UK service sector PMI shows an improvement to 55.3. 

US Dollar - US Markets

Exchange rates for the greenback are weaker against its major currency partners this morning, with the exception of the Japanese yen, Swiss franc and South African rand. The US dollar has sunk 0.2% against the euro to trade at 0.68 and 0.1% against the pound to trade at 0.62.

The US dollar completed three consecutive weeks of gains against the pound on Friday after labour market figures came in worse than expected, with overall employment rising to 9.8%. Factory orders in August also fell -0.8% on the month, showing that recovery in the US is struggling to gain momentum. Today in the US the results of the ISM non-manufacturing survey are published with consumer confidence figures out tomorrow. 

Euro - European Markets

Euro exchange rates are relatively unchanged this morning, rising 0.2% against the US dollar and also gaining on the yen, pound and Australian currencies. The euro is currently valued at 1.46 against the greenback and 0.91 against the pound. 

Figures this morning show the German service sector contracted in September, with activity falling from last month's 53.8 reading to 52.1. However EMU figures also released this morning show that as a region, the service sector is expanding, with the PMI reaching 50.9 in September and tipping into positive territory. Retail sales for the region fell by -0.2% in August, running at an annual decline of -2.6%. The euro is currently trading at high levels against the US dollar and its major currency partners, as the major beneficiary of diversification from the safe haven yen and US dollar. 

Other Currencies - Highlights

Exchange rates for the New Zealand dollar are expected to remain weak against its Australian counterpart, as Australian growth rates exceed those of New Zealand. Speaking to investors in Hong Kong, New Zealand finance minister Bill English noted that the Australian recovery comes from a broader base and a weak kiwi dollar could benefit New Zealand exporters. The New Zealand currency fell 0.2% against the Aussie following the announcement, and is currently trading in the region of AUD0.82. 

Exchange rates for the Japanese yen rose against the US dollar last week after US jobless figures came in weaker than expected. The yen also advanced against the US currency after G7 ministers refrained from criticizing a weaker US dollar. A strong US currency is required to support export growth throughout the world and Japanese stocks have fallen recently on speculation that the recent rally does not have enough support behind it. The yen is currently trading at 89.83 per US dollar.