Yesterday certainly did prove what we have been stating all year. Basically, in closing 2010, we have had a year of extreme volatility in the currency markets and the unpredictability of it all has made it a very interesting industry to be involved in. From all of us here at Currency Solutions we wish all of our readers a very happy New Year.
Pound Sterling – UK Markets
Yesterday afternoon saw a vicious drop in the Pound against the Dollar and the Euro as a report showed that house prices fell and are expected to continue to do so into 2011 as austerity measures kick in. Our currency dropped to a 7 week low against the Euro and fell against 16 of its most traded peers.
Furthermore, this news was worsened by news that investors were seeking safe haven refuge for the rest of the Christmas period in other currencies such as the Dollar and the Swiss Franc.
US Dollar – US Markets
The Dollar also fell against most of its major counterparts as economic data pointed towards the economy gathering pace into the New Year. Reports showed business expansion, less jobless claims and more pending home sales are causing demand for currencies in nations with higher-yielding assets.
Euro – European Markets
After yesterday’s stark warning for the Euro during 2011, German Chancellor Angela Merkel has vowed to defend the single currency as she believes it forms the basis of Germany’s economy. Leaders of the 15 zones are going to come together in an attempt to form a permanent crisis mechanism once the temporary practice expires in 2013.
Other Currencies – Highlights
The Yen continued the theme of flagging currencies yesterday as it fell to a 2 week low against the New Zealand Dollar, as speculation continued that the economic recovery will pick up next year and boost demand for assets in nations with higher returns. The Australian Dollar also picked up the pace on the back of this news.
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British Pound Suffers Losses Ahead of Tuesday's Critical Vote