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US retail sales predicted to slow to 3.4% this year

Sterling rallied against a tumbling euro on Friday after France and 8 other euro zone countries were downgraded, which prompted a sell-off in the single currency. This in turn hit risk sentiment and knocked the pound to a 17-month low versus the dollar. The pound climbed against the single currency, which fell roughly 1 percent on the day to a session low of 1.2113 . The euro hovered within sight of Monday's trough of 1.2162, the lowest level since September 2010. But sterling dropped versus the dollar, tracking a fall in the euro/dollar trading pair, as jittery market players concerned about an escalation in the euro zone debt crisis reached for the safe-haven greenback. Sterling hit its lowest level since late July 2010, falling around 0.7 percent to $1.5234 after breaching a reported options barrier at $1.5250. Support is seen around $1.5190, the 61.8 percent retracement of sterling's 2010-2011 rally.
No major data due today.


The euro weakened for a second day, touching an 11-year low versus the yen after Standard & Poor’s stripped France of its top credit rating and cut eight other euro zone nations. The shared currency extended a six-week-long drop against the greenback before a series of debt auctions this week by European nations begins with France’s bill sale today. France will auction as much as 8.7 billion euros ($11 billion) in bills today, followed by the European Financial Stability Facility’s 1.5 billion-euro sale of bills and Greece’s offering of bills tomorrow. Spain will also offer debt tomorrow and Jan. 19, while Portugal will sell bills on Jan. 18. The shared currency is currently trading at 1.2660 against the dollar, and 1.2075 against sterling.
Data 18.00: ECB President Draghi Speaks.


After taking mild losses against its main currency rivals for the majority of last week, the USD was able to rally on Friday, as poor euro-zone news caused traders to shift their assets to safe-haven currencies. The EUR/USD hit a fresh 16-month-low after credit ratings for a number of euro-zone countries were downgraded. In addition to making gains on the euro, the greenback also turned bullish against both the Japanese yen and Swiss franc. Turning to today, traders should note that US markets will be closed for a bank holiday and the dollar's direction will likely be determined by news out of the euro-zone. Traders may want to pay careful attention to a speech from the ECB President later in the afternoon. With no dramatic announcements expected from the speech, investors may decide to extend the safe-haven dollar's bullish run for another day.
No major data due today.


•    The Australian and New Zealand dollars fell versus the U.S. and Japanese currencies before a report tomorrow forecast to show China’s economy grew the least in 10 quarters in the last three months of 2011. Both South Pacific currencies weakened after Standard & Poor’s lowered the credit ratings of nine euro-zone nations, increasing concern Europe’s worsening debt crisis will hurt the global economy. The so-called Aussie maintained its decline even after a statistics bureau report showed home loans rose in November by more than economists had forecast.


























red = down

blue = up (snap shot)


These rates are for indication purposes only