Greek debt concerns hurt Euro

POUND
Sterling has regained recent loses against the Euro but remains low against an in demand USD, moving near to an 18 month low. The pound along with the Euro, remains vulnerable to a big reduction in investor appetite for risk as pressure mounts from rating agencies on Euro zone nations. There is no UK data due until tomorrow so sterling’s performance is likely to be heavily dictated by events in Europe, with further rallies possible against the Euro and falls vs. the USD. The market will be heavily focused on CPI (inflation) data out tomorrow morning which is forecast at 4.2%.

EURO
I`m sure as you read this report you are no longer surprised about events in Europe and the single currency once again falling against the pound and the USD (into 1.26). Investors are very cautious over Europe with the threat of a mass downgrades across euro zone countries. Rating agency Stand and Poor’s (S&P) downgraded the credit rating of nine member states including France and Austria after markets closed on Friday. In further news, negotiations between Greece and private creditors on a debt deal broke down increasing the risk of Greece defaulting. Tomorrow sees the release of German economic sentiment data and Euro CPI tomorrow, and with Germany not being downgraded, things could be worse…

US DOLLAR
The USD is stronger this morning on the back of risk aversion and also supported by stronger economic data for the region, sparking confidence in a recovery within the US. US Michigan sentiment data highlighted confidence in the US is improving with further rises expected in the coming months. US markets are closed today but with so much turmoil in the Euro zone there is no expectation for the USD to weaken on much smaller trading volumes as investors continue to avoid risk.

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