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New Zealand vows to stay course on debt reduction plans after rating cut

Sterling rose to a two-week high against the euro on Friday, buoyed by a reported large order to buy the UK currency, though analysts said the prospect of more monetary easing in the UK could soon put it back under pressure. Traders said a UK clearer had an order to sell an estimated three or four billion euros for conversion into sterling, related to the UK's annual rebate from European Union agricultural subsidies. Sterling touched a high of 1.1668 this morning against the single currency, but analysts predict sterling to come under pressure this week ahead of the Bank of England policy meeting, where there is an outside chance policymakers opting for another round of quantitative easing.
Data 09.30: Manufacturing PMI


The euro fell to an eight month low against the dollar before European finance ministers gather today to weigh the threat of a default in Greece, which is making fresh budget cuts to to secure an international bailout. The single currency fell  for a second day before the meeting, at which officials will discuss how to shield banks from the regions debt crisis and consider increasing their rescue fund. The euro depreciated to $1.3330 per dollar this morning from $1.3387 in New York last week, after declining to $1.3314, its weakest level since January 18.  Today's Luxembourg meeting was the original target date for approving an 8 billion euro loan payment to Greece, the sixth installment of the 110 billion euro lifeline assembled at the outbreak of the crisis in May 2010. That decision was pushed back until mid-October as Greek Prime Minister George Papandreou tries to close a deficit gap. Greece's government approved 6.6 billion euros of austerity measures including firing state workers, an emailed statement from the Finance Ministry showed yesterday.
No major data due today.


After all the concern that the US is debasing its currency, the dollar beat stocks, bonds and commodities for the first time since May as investors sought refuge from slowing growth and Europe's sovereign debt crisis. The US currency rose 6 percent against a basket of currencies in September. Gains for the worlds reserve currency show investor confidence in the nations credit worthiness after Standard and Poor's stripped the US of its AAA rating two months ago. Even with Republican leaders in Congress joining critics of Federal Reserve stimulus measures, the currency rose against all 16 of its most traded counterparts in September for the first time in more than three years.  Against sterling the dollar strengthened from a low of 1.5715 last week to currently trade at 1.5530.
Data 15.00: ISM Manufacturing PMI.


• New Zealand and the companies that cut its credit rating last week have a different view of the country's ability to curb government and household debt, Finance Minister Bill English said. S&P reduced New Zealand's currency rating from AA+ to AA.
• Signs of stability in China's manufacturing industry in September may ease concern the world's second largest economy will suffer a slump in economic expansion that escalates the risk of another global recession.


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