Following its respite yesterday, the Euro has continued to find more strength, but the currency is still vulnerable as concern mounts over whether the actions announced by European Central Bank President Trichet yesterday will be sufficient to calm the crisis with Greece’s rating also now looking unsafe. The initial Euro strengthening can be seen as a result of the fact that the bond repurchase programme will be extended for three months in a bid to calm the crisis - but no more new larger quantitative easing decisions were taken with issues in Ireland still rumbling on.
Pound Sterling – UK Markets
The Pound had a poor day against both the US Dollar and Euro despite better than expected PMI Manufacturing data this week. This morning’s PMI Services data however, measuring economic strength in the services data has dipped.
It has been a fairly quiet week for UK data with Sterling mainly responding to the broader European themes. Next Tuesday sees the first influx of important UK data covering industrial and manufacturing production.
US Dollar – US Markets
The US Dollar has continued to lose out to the Euro and is experiencing volatile movement against the Pound so far losing out to Sterling this morning. Investors have continued for now to choose riskier currencies helped by stronger US housing data and short term ECB bond buying.
Today’s non-farm payroll figures for November have the potential to bring movement with an upwards figure following on from some of the mixed data this week having the potential to move the Dollar. The expectation is for a rise of 146,000.
Euro – European Markets
The news that the ECB will be extending its bond-purchasing programme for three months to help out European nations seems to have been welcomed by markets as the Euro has found some strength. The currency is still in a very vulnerable position however as some believing the bond measures were inadequate with the underlying debt problems not being solved.
The emphasis is on providing individual nations more time to help themselves out of crisis, before the EU steps up measures any further.
Greece’s credit rating is also under threat by Standard & Poor’s and issues continue to stagnate in Ireland pending the 7th December budget. Interest rates were held at 1 percent yesterday for the 19th month in a row.
Other Currencies – Highlights
The Canadian Dollar experienced its largest gain in two days against the US Dollar since May as stocks and commodities were boosted with crude oil gaining in value in response to the actions taken to appease the European debt crisis.
A report today is also expected to show that payrolls increased for a second month in a row in Canada which may also help the currency.
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The Pound continues to weaken following disappointing UK retail sales data