The Euro and the British Pound advanced against the dollar in early trading with the single currency eyeing further advances as Greek concerns subside as European countries look set to provide support.
Pound Sterling – UK Markets
The halting of interest rates last week suggested that the BoE are taking a ‘wait and see’ stance on the country’s hesitant economic recovery and this made for a quiet few days. This morning at 1033 GMT the pound traded above the 1.510 level against the dollar at 1.5116 and 1.1084 versus the euro.
Some economists say that a weakening pound is good for Britain at present, not only because it tends to boost economic growth by making British goods and services more competitive on world markets, but also because it will help to rebalance the structure of the economy.
US Dollar – US Markets
This morning saw the dollar trading at 0.6596 versus the pound and 0.7311 against the euro at 1037 GMT, following a steady weekend against the majors as a result of solid employment data from the US the Non-Farm Payrolls dropped by 36,000 as the Unemployment Rate was held at 9.7%. The unemployment rate has reached below 10.0% for two consecutive months, a positive sign for the dollar
The relative calm in the trading of the dollar of late shows that investors are waiting for clearer signs whether the US economy has truly recovered.
This week traders are advised to pay special attention to the Trade Balance, the weekly Unemployment Claims, the Retails Sales and the Consumer Sentiment reports.
Euro – European Markets
Europe’s currency strengthened against 11 of its 16 major counterparts after French President Nicolas Sarkozy yesterday said the euro region is ready to rescue Greece.
The debt-ridden country has been told it should sell off some of its islands to raise cash and there have even been suggestions the country should flog the ancient Acropolis in Athens.
Looking ahead to the next few days, traders are advised to follow every update regarding the Greece debt crisis as this seems to set the tone for the trading of the euro. Traders should also follow the leading economic publications from Germany and France as they will have a large impact on the direction the single currency takes.
Other Currencies – Highlights
The Australian dollar is being overtaken by the Canadian dollar among commodity currencies as the security of Canada’s banking system and ties with the US economy spur investors to buy the loonie.
Options revealed demand for the right to sell the Aussie and buy the Canadian dollar reached the highest last month in almost a year.
British Pound Loses Strength on Dismal Sales Data
Dollar Weakens as Fed Rate Cut in July Seems Imminent