Euro Crisis Rears Its Ugly Head Again

The Euro has been dropping following a spike in Portuguese bond yields which saw the highest levels since the creation of the Euro. The situation caused the European Central Bank to intervene by buying bonds putting the nation’s inability to deal with its own debt issues back on centre stage. This is a great opportunity for those needing to make a transfer into Euros to take advantage of the weak rate. Don’t forget that even if your transfer requirement is not immediate you can fix a rate in advance – speak with your broker or enquire with us today.

Pound Sterling – UK Markets

Sterling has gained on the weak Euro but declined against the US Dollar since last night following yesterday’s decision to leave interest rates on hold. UK Producer Price figures this morning came in above target for January although little immediate reaction was seen in the currency markets as they are still being dominated by interest rate issues. Yesterday’s Bank of England decision to maintain interest rates at 0.5 percent will have dampened expectations for those who thought the hike might come very early in 2011. Next weeks inflation report and the MPC minuets the following week will give markets more to pour over. Former Bank of England policy maker Kate Barker has added further furl to the fire by suggesting that current policy makers will be very cautious about a rise which could potentially strengthen the Pound where a weak currency benefits exporters.

US Dollar – US Markets

The Dollar has gained on other major currencies following a surprise drop revealed yesterday in US joblessness to the lowest levels since July 2008. The currency has also benefited from its status as a safe haven as the resurgence of tensions in Egypt have created uncertainty after it was reported that President Mubarak will not stand down against all expectations.

Euro – European Markets

The Euro has suffered a steep fall as a severe rise in Portuguese bond yields has caused the European Central Bank to intervene bringing the yield back down –the sovereign debt woes in the Euro zone are now back to the fore. Portuguese bond yields hit 7.6 percent which is the highest level since the creation of the Euro. This has also raised expectations that Portugal will need bail out funds at some stage.

Other Currencies – Highlights

The Canadian Dollar rose against the Euro in response to the rising Canadian new home price-index and US initial jobless claims falling to the lowest levels since July 2008. The new home price index rose by 0.1 percent in December. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000.