The Euro fell to a ten month low against the dollar after EU leaders said Greece should turn to the International Monetary Fund for any aid. Meanwhile, the pounds exchange rate is weak as the market awaits Alistair Darling’s 2010 budget announcement.
Pound Sterling – UK Markets
Sterling fell against the dollar this morning, remaining pressured after yesterday’s disappointing UK inflation numbers. At 0928 the Pound traded at USD1.5036.
However, the Pound did manage a rise against the euro, with the single currency coming under considerable pressure on increasing doubts that any solution for highly indebted Greece would be sought quickly. At 0931 the GBP/EUR exchange rate was 1.1139.
Today, all eyes will be on the UK government's budget announcement at 1230 GMT. Alistair Darling is expected to revise down expectations for borrowing, but this is unlikely to sway investors' concerns over the UK’s mounting debt.
US Dollar – US Markets
The Dollar strengthened on the back of a dismal day for the Euro and a poor show from the Pound, trading at EUR0.7408 and GBP0.6650.
Investors will be looking closely on the New Home Sales report, due later today at 14:00 GMT for an indication of the housing market's recent direction. Lower than expected results may cause the USD to decline against other major currencies.
Euro – European Markets
The single currency slumped to a ten month low against US currency and was also down against the Yen and the Pound whilst hitting an all time low against the Swiss Franc yesterday, when it was down more than 100 pips.
Any confidence in the European Union’s political process has now been dashed after leaders from France and Germany said that the troubled nation would have to turn to the International Monetary Fund for help, which has harmed the Euro exchange rate considerably.
Currently the single currency is trading at 0.8977 against Sterling and 1.3498 versus the US dollar having dropped to USD1.3391 in earlier trading.
Resultant shifts from this morning’s French and German data, including the German Business Climate report, could give the Euro some much needed support if positive.
Other Currencies – Highlights
The New Zealand Dollar declined against 13 of its 16 major counterparts after the current-account deficit widened more than economists estimated. The Yen is also down on the day, trading at USD/JPY90.407.
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