Brief Currency Updates

EUR: The euro recovered exactly the amount of ground it had lost during the previous week, about a cent and a quarter against the pound. The most inspiring Euroland economic data for the euro were the measures of investor confidence in Germany and Euroland, both of which bounced back strongly in December. Political developments were positive too, with EU leaders reaching an outline agreement on centralised banking supervision and budget-setting. Investors were pleasantly surprised.

USD: Sterling advanced by more than a cent and a half against the dollar, recovering from a bit of a wobble on Thursday. At the root of the dollar’s problems was a decision by the Federal Reserve to increase its programme of asset purchases – quantitative easing – by an extra $45bn a month and to commit to ultra-low interest rates until unemployment falls below 6.5% (it is currently 7.7%). Both aspects of the Fed announcement were dollar-negative.

CAD: Sterling strengthened by a cent and a half against the Loonie. A good half of that move came on Friday afternoon and in early trade this Monday morning. In a quiet week for Canadian economic news the “highlight” was an annual -3.6% fall in housing starts. In the absence of anything economically concrete from Canada the political distractions in Europe and Japan were enough to leave the Loonie bracketed with the Greenback for the duration.

AUD: Sterling strengthened by almost a cent against the Australian dollar but it was arguably more by luck than by judgment. The commodity currencies did not hang together in the way they often do. The Australian dollar kept pace, coincidentally, with the South African rand while the New Zealand dollar tracked the pound and the Canadian dollar marked time with the US dollar. The divergence probably had more to do with investors’ year-end adjustments than with any fundamental differences between them.

NZD: There was little to choose between the NZ dollar and the pound. The kiwi made an insignificant net gain of 30 ticks, a third of a cent.. The commodity currencies did not hang together in the way they often do. The Australian dollar kept pace, coincidentally, with the South African rand while the New Zealand dollar tracked the pound and the Canadian dollar marked time with the US dollar. The divergence probably had more to do with investors’ year-end adjustments than with any fundamental differences between them.

This article was provided by currency exchange and send money online specialists moneycorp, the UK’s leading independent foreign currency exchange brokers.