Euro hits 3 week low against dollar as investors shun single currency

US Dollar

The dollar has seen a mixed start to the week as the greenback fell against sterling and levelled off against the euro. A risk appetite environment has led the way overnight in Asia as investors greeted news of Egyptian President’s resignation with relief, boosting demand of high yielding currencies. A cent was given up against the pound as cable traded over the $1.6050 level. Last week saw GBP/USD retreat from $1.6280 on Feb 3rd to $1.5960, to pick up today and return above the $1.60 handle. In EUR/USD we saw the currency pair go back and forth last week but a steady gain in the dollars favour saw a two and a half cent move in the greenback camp.
No major data. Speaker 15.00: FOMC Dudley .

Pound

Sterling has kicked off the weak on a positive footing as gains are extended against the euro and a recovery has been seen in the value of cable. In GBP/EUR, issues which has hounded the single currency over the last few months have returned, allowing the pound to extend gains and close in on the 1.19 handle. Overnight we saw a 4 day high hit at 1.1876, a gain of 25 pips or 30% if compared to Friday’s close. In GBP/USD sterling has bene¬fitted from gains in risk appetite in overnight Asian trading and reversed Fridays losses in cable. Friday saw a rise in industry’s input cost fuel inflation worries in the UK. The price of materials and fuel paid by UK manufac¬turers rise at an annual rate of 13.4% in January. The data suggests that this weeks consumer price inflation figure will show a rise. Inflation data is intrinsically linked to that countries currency value, so a rise in inflation usually leads to a stronger currency. Looking ahead to the week, we have headline economic data on the way in the form of CPI data, quarterly inflation report and retail sales figures.
No major data.

Euro:

The euro has had a setback of late in its recovery from the end of last yearss problems with solving certain countries debt issues. The markets had given the euro a bit of a break at the beginning of this year, but now players are focusing back in on how certain countries are addressing paying off their debt mountains. Last week saw Portugal defiant as borrowing costs rise as the European Central Bank intervened to buy Portugal's debt after yields rose sharply. Friday also saw credit rating agency Moody’s downgrade the senior unsecured debt of the six Irish banks. The common currency has been heading lower since the beginning of the Asian session hitting 0.8413 against sterling and $1.3573 on the dollar.
No major data.

General:

• Oil prices have eased to about $86.00 per barrel as the situation in Egypt returns to normal, and fears about an oil shortage faded.

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