Mixed news out of Europe sees Euro make gains as market awaits further comment from Bernanke on Friday
29/Aug/2012 • Currency Updates•
The euro made gains against both the US dollar and the pound yesterday. It gained 0.5 per cent, trading close to a 7-week high against the greenback following successful bond auctions in Spain and Italy. The move, however, has come in spite of rising concerns regarding Spain’s public finances following the revelation that the region of Catalonia is seeking a €5bn bailout from Madrid. A better than anticipated German GfK Confidence survey helped steady the ship.
The US dollar advanced forward a little against the pound yesterday, but not as much as might have been anticipated given that global shares were slightly down; housing data released indicated an improvement in the US economy and the weak tone of recent Chinese data releases appears to have taken the edge off global risk appetite. It appears that institutional investors are still cautious of greenback-denominated holdings because of fears that the Fed may be set to ramp up its QE programme as soon as September, thanks to the announcement last week. All eyes and ears will be on Ben Bernanke this Friday as he is due to speak at annual meeting.
The pound sterling failed to impact on other currencies yesterday. Although last Friday’s Q2 GDP figure brought an upward revision, it also served to remind investors that levels of economic activity in the UK had plummeted in the three months to the end of June. With very little UK data due for release for the remainder of the week, sterling may remain out of favour for a little while.