Sterling falls after job data disappoints
16/Dec/2010 • Currency Updates•
The pound sank versus the dollar yesterday as markets responded to disappointing jobs data. Sterling was also pushed lower after worries about UK banks’ exposure to Spanish debt took on more weight after the news that Moody’s put Spain’s ‘Aa1’ rating under review.
The euro fell against most currencies on the news of Moody’s putting Spain’s rating under review, especially against the Swiss franc, against which the euro crashed to record-breaking lows.
The euro was also squeezed as European banks started selling euros to buy dollars in order to secure dollar funding over the turn of the year. What is unusual about this is that whereas this is expected to happen and does so in less choppy economic times, this year’s price action in the swaps market may be extended as rating agencies continue to highlight Spanish sovereign and bank debt.
The greenback gained against most currencies as US treasury yields rose after the Federal Reserve’s policy meeting on Tuesday. Strong industrial production and manufacturing data helped the situation further.