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Equities recover on risk move to push commodity currencies higher

Sterling started yesterday off on the back foot as risk was sparse in global markets with the ongoing Juggernaut of gloom that is the European debt crises. But as we have seen over the last few weeks, an extremely volatile market can easily post huge swings as news is digested daily with regards to sorting out the debt mess. Positive sound bites were heard, among them the ECB's announcement of a 12-month liquidity move to help lending, which helped lift the mood. US economic data also helped lift sentiment, so risk was back on, helping the higher yielding currencies which included the pound. This was seen the most in cable's value as we saw an impressive two cents gained in GBP/USD, dragging itself off an intra-day low of $1.5524 to hit over the $1.57 handle. For GBP/EUR, there was hardly any movement as side-ways trading was seen with the pound and euro cancelling each other out in the ugly stakes competition. At present, the UK currency is taking a back seat and trading of outside influences, but don't be fooled into this false outlook for sterling. Even though there is still more room for gains on the single currency should the eurozone debt crises drag on past October, sterling may find itself under pressure with possible QE moves by the end of the year. The way to trade this market, buy on the dips of euro and dollar, as a reversal in fortune can be easily seen just round the corner. Limit orders are a great tool for this, just contact your VFX broker for more details.
Data 09.30: BoE Credit Conditions Survey


A game of two halves was seen for the single currency yesterday as the morning session saw euro weakness as borrowing rates for Italy and Spain spiked to the highest levels since the global financial crises amid concerns their economies, the third and fourth-biggest in the eurozone, could be sucked into a debt spiral. As we have seen though, this world crises in financial markets is a fast moving beast, evolving minute by minute as European leaders scramble to sort out their own issues before Mid October. Helpful news coming out of Germany and the ECB supported the euro to recover some losses. The ECB announced that it was ready to offer 12-month liquidity operations should the situation in the market require it. Also, The Greek Parliament approved a property tax to continue the push on with hard hitting austerity measures to prop up the Greek economy. German Chancellor Angela Merkel also tried to smooth the relationship between Greece and Germany by stating "Germany is ready to offer all kinds of help". The markets paused for breath on the back of this and some risk returned, supporting EUR/USD enough to bring the currency pair back over the $1.36 handle,    
Data: 08.55: German Prelim CPI -0.1% from 0.0%.


A small recovery was seen in global markets yesterday which saw a reversal of fortune for the greenback. As the king-pin of safe haven currencies, any kind of improvement in sentiment with regards to the ongoing financial debt crises has and will continue to see a sell-off for the US currency, which was evident In Tuesdays afternoon trading session. A couple of cents were lost versus the pound and even the battered single currency made back losses to send EUR/USD above the $1.36 handle. As well as positive news stories coming our of Europe, US economic data in the form of US consumer confidence came in higher than previous albeit weaker than forecast (45.4 from 46.0 expected), sending global stock markets higher and into positive territory.
Data 13.30: Core Durable Goods Orders 0.1% from 0.8%. Speakers 22.00: Fed Chairman Ben Bernanke.


•    The Swiss franc fell against the dollar and the yen as data showed the country's consumer demand dropped to the lowest in al;most two years in August, adding to sings the economy is cooling. The franc          weakened against 14 of 16 major counterparts including sterling. The weak data added to evidence that the strength of the franc has hurt the Swiss economy, which is likely to weigh on the currency from the economic perspective. It will probably raise the risk of further policy intervention from the Swiss National Bank again.
•    The Rand rallied the most worldwide as stocks and commodities rose on speculation the European governmemnts will boost efforsts to contain the regions debt crises.
•    The Aussie and Kiwi dollars advanced as stocks rallied around the world, supporting demand for higher yielding assets.   


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