Pound trades higher against the euro despite release of Irish budget 2011

US Dollar:

The dollar has led somewhat of a rollercoaster ride this week, with an initial fall early Monday after the Ben Ber¬nanke interview, hinting that the central bank may launch further asset purchases to prop up the ailing US econ¬omy, although he said that “it doesn’t seem likely” that the economy would fall back into recession. Then a pull back in the dollars favour saw the greenback rally on sterling and the euro. Last night saw investors dump gov¬ernment bonds, with yields and treasury's hitting their highest level in six months on the back of the tax cut deal in Washington. This saw the dollar fall back again. In Asian trade overnight, the most notable headline saw the China National Bureau of Stats push up the release of its November economic data to this Saturday from Mon¬day. Risk aversion did resurface following the NBS announcement on contributed speculation China may tighten interest rates this weekend. The buck soon made back losses from overnight trading against both sterling and the euro.
Data: Treasury Currency Report

Pound:

As stated above, the pound has lost ground on its US counterpart as risk aversion has crept back into the mar¬kets. Cable gave up over a cent to see GBP/USD fall from trading over the $1.58 handle to just duck under the $1.57 level. There was better news for sterling sellers who have an exposure to the euro, as the under-fire sin¬gle currency yet against succumb to the general bearish feeling towards the euro, with the single currency sold off. This saw GBP/EUR take nearly a cent in the pounds favour as we homed in towards the 1.19 handle. Data wise, we saw UK shop price inflation remain extremely subdued in November, a report by the BRC said, rising by just 0.1% on the month and rising 2.0%. KPMG said UK recruitment consultants reported a further increase in permanent postings during November.
Data: 11.00 CBI Industrial Order expectations expected at –12 from –15

Euro:

The recent gains made by the single currency this week have now been firmly wiped out as a combination of risk aversion and bearish views on the euro have now push the single unit back to Friday’s lows. The scramble for the dollar in the risk aversion move has seen traders sell the euro and move back into the yen, dollar and to an extent sterling. The euro’s move lower was despite some easing over concerns regarding the Irish budget for 2011, as EUR/USD sank below $1.3220. Against the pound we saw a fall of 0.80% as EUR/GBP targeted the 0.84 handle. Looking ahead, the bearish view on the single currency looks set to remain as any chance to sell the euro seems to be lapped up by investors.
Data 11.00: German Industrial Production m/m expected 1.1% from –0.8%. Speakers 16.00: Buba Presi¬dent Weber.

General:

• Gold, silver and copper hit record highs on Tuesday, as the prospect of a further round of quantitative easing in the US sparked fears of a weakening dollar, boosting demand for commodities as a hedge. Gold reached an intra-day high of $1,432.50 an ounce, an all time record, before profit takers moved in. Silver futures hit $30.75—the highest level since march 1980 –before easing in afternoon trade.

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