Euro posts losses in overnight Asian trade on decline in risk appetite

US Dollar:

The buoyant start to the year has been rained in slightly as we start the third week of the year on a negative footing in risk appetite. Friday’s move by China to increase its bank requirements saw a move back in the dol-lars favour as with the euro taking most of the hit. The dollar had lost over five cents on the euro since the start of the year and a similar number against sterling, but a small reversal in EUR/USD has now given over a cent back in the greenback camp. The dollars position against the pound has also seen positive moves for the buck, but only in a levelling off stance rather than making back losses made last week. Today is a national holiday in the states for Martin Luther King day. Same day trades on dollars not available.
Data: US markets closed for National Holiday.

Pound:

We saw a recovery in GBP/EUR on Friday after sterling posting losses to see the pound fall below the 1.18 han¬dle. Over the weekend a fall in risk appetite saw the euro take the bigger hit than the pound which led to over half a cent pulled back in sterling’s favour. The pound did not have it all its own way though, as the fall in risk appetite also took its toll on the pounds performance against other currencies. Cable suffered at the hands of traders as GBP/USD lost half a cent, but this morning we have seen the pound hold firm. GBP/USD rally from $1.54 area in early January reached fresh one-month highs at $1.5880 on Thursday/Friday, right ahead of De¬cember’s high at $1.5910 and the pair has remained consolidating gains during Asian trading. Overnight news from Rightmove showed that the average UK asking price by home sellers rose 0.3%, its first increase for 3 months in January amid muted supply. The pound’s position against the Aussie dollar continues to post gains as we saw the currency pair break through the $1.60 handle on Friday, as the Queensland floods begin to spread southwards towards Victoria. Both the economic and corporate diaries are otherwise light as we begin the week.

Euro:

This morning has seen a slight reversal for the euro against the dollar alongside a continued decline against sterling. The single currencies gains last week saw over four cents put over the dollar to see EUR/USD trade over the $1.34 handle, but a fall in risk appetite has put a halt to this as we see the currency pair fall under the $1.33 level. The euros performance against sterling did see a slight revival on Friday, but those gains were eas¬ily given away with GBP/EUR continuing that move this morning against the euro. Asian moves overnight saw traders continue to hammer the euro lower against the dollar and to a lesser extent sterling as the single cur¬rency yet against took over holding the ugly stick.
No major data.

General:

• There was no rest bite for the Australian currency over the weekend as the floods spread southwards towards Victoria, potentially costing the country millions of dollars more in the clear up after devastating floods in the Queensland area. The Aussie dollar continued its fall against sterling as we saw GBP/AUD breakthrough the $1.60 handle.

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