British Pound Hits Record Lows Against Euro (page 2 of 2)

There are only 2 upcoming event risks that have the power to drive the EUR/USD to 1.60 this week; Federal Reserve Chairman Ben Bernanke's speech on Wednesday and Friday's non-farm payrolls report. Meanwhile the Swiss franc is stronger across the board despite the Swiss State Secretariat for Economic Affair's downward revision to next year's GDP forecasts.

British Pound Hits Record Lows Against Euro

The British pound extended its losses against the US dollar and hit a record low against the Euro on the back of zero consequential economic data. Although dollar strength could be partially blamed for the currency's latest string of weakness, the main reason for the market's bearishness is their concern that the UK could be in just as much trouble as the US. The only difference is the outlook for monetary policy. With the Federal Reserve, it is clear that they will continue to cut interest rates. Although the ECB is on the other side of the spectrum, they too have let the market know that interest rates will remain on hold for some time. The outlook for the BoE on the other hand is more convoluted. Even though economic data suggests that they should continue to lower interest rates, King warned this morning that it is crucial for them to prevent inflation from getting entrenched.

Reversal in Commodity Prices Drive Australian, New Zealand and Canadian Dollars Lower

The New Zealand dollar fell over 1 percent against the US dollar today as economic data was overwhelming weak with building permits, business confidence and money supply all falling short of expectations. Business confidence actually dropped to a 17 year low, suggesting that difficult times lie ahead for NZD economy. Australia also reported softer home sales and private sector credit while Canada was the only outlier with stronger growth in the month of January.

Yen Traders Look Forward to Tankan Report

The Japanese Yen weakened across the board today despite an improvement in industrial production and labor cash earnings. Earnings have been on the rise for the past 2 months which is very encouraging because weak wage growth has been the main reason why Japanese consumer spending is depressed. This evening we are expecting the Quarterly Tankan report. Business confidence should slip given the slowdown in the global growth and the recent appreciation of the Japanese Yen.