Weekly Update

Risk appetite improves on economic data and no Greek tragedy.

Generally positive Economic data encouraged equity rallies which helped arrest any further dollar rally and led to the Japanese Yen losing ground against most currencies. The Canadian Dollar and Australian Dollar led the gains against the yen as commodities rose, Crude oil closing at 81.50.
In the week ahead any continuation of this may see further declines for the Yen and US Dollar.The Euro remained unchanged against the dollar despite improved risk appetite and marginally improved sentiment for Greece, who managed to secure their Euro 5 Billion 10 year Bond auction successfully.However, it may be that this week that the Euro is able to make more headway against the dollar particularly if the equity markets continue to improve.
Sterling which began the week in free fall on the back of weekend opinion polls and rumors regarding the Prudential , AIA takeover recovered to close the week much as it had started. The sell off , however, does indicate how fragile the currency is. In the build up to the election it offers the prospect of some serious volatility and generally sentiment remains poor despite some better economic data.

I stick with the view of seeing 1.40 Euro/US Dollar before 1.30. The week ahead offers very little in the way of exiting economic data so currency markets may well take their lead from equity markets.

Finally,I have to include a comment of the week which comes from Greece.

The Greek prime minister said he will fight to ensure speculators don’t undermine his push to restore order to the country’s economy. It’s unjust and undemocratic that his efforts are being undermined “by some ‘kids’ in New York and elsewhere sitting in front of a computer,” he said yesterday.

Well George they were the same boys who helped you fudge the budget numbers to get in the Euro in the first place.