Stock markets, commodities and currencies have dwindled across the globe in the last 24 hours as investors abandoned risky assets for the relative safety of the dollar. Fears of European sovereign debt default as well as a surprise rise in US jobless claims created a mist of anxiety ahead of today's US payroll data, which will undoubtedly create further volatility.
Pound Sterling – UK Markets
The Bank of England's decision yesterday to merely pause stimulus has not had much of an effect on the pound and has done little to take away ongoing concerns regarding sterling and the UK's fiscal position.
The pound suffered against the greenback as a result of investors jumping ship to the US currency, trading at an 8-1/2 month low of USD1.566 at 0811 GMT. Against the euro, the pound has gained slightly as the euro zone continues to suffer from concerns over sovereign debt. At time of writing GBP/EUR sits at 1.147.
US Dollar – US Markets
The dollar hit a seven-month high against a host of currencies this morning, as rising investor risk aversion on fiscal problems in some euro zone countries made the safe-haven currency a far more attractive prospect for traders.
The dollar index .DXY rose as high as 80.345, its strongest since July 2009. The U.S Non-Farm Payroll data is scheduled today at 13:30 GMT and, as always, will prove interesting.
Euro – European Markets
The euro dropped to an eight-month low of 1.3667 against the dollar at 0807 GMT, amid concern widening budget deficits will stifle Europe’s economic recovery.
Greece’s situation remains the thorn in the side of the European currency as it headed for a fourth weekly loss versus the dollar. Greek customs and tax officials began a 48 hour walkout yesterday in protest against government austerity measures, which could signal a general strike later this month.
Speculation about a bailout raises the question - who will be next in line? Portugal may be the correct answer as the country’s 5 year CDS hit new highs of 220.2bps.
Other Currencies – Highlights
The Swiss franc fell from its highest level in more than a year against the euro amid speculation the nation’s central bank sold the currency to curb its strength.
The franc reversed earlier gains against the euro on speculation the Swiss National Bank sold the currency to curb gains that threaten deflation.
Pound Sterling Recovers Modestly on Strong Retail Sales Growth
Dollar Rally Loses Steam on Mixed Data
Pound's freefall continues despite the upbeat employment report