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Dollar was bought heavily against both GBP and EUR yesterday in a trading session light on data but heavy on significance.

It is many people’s belief that the dollar is slightly oversold in the short term and with risk aversion picking up as stock markets take a breather from their recent rallies we would expect to see further slips in EUR/USD and GBP/USD. Equity bourses were uniformly lower yesterday with the FTSE lower by 2.6%, the DJIA by 2.1% and the Nikkei losing a similar figure in Asian trade overnight.

GBP/EUR moved to a new yearly high yesterday as Eurozone data continued to disappoint. Employment in the eurozone fell by a record 1.22 million jobs in Q1 with particular weakness seen in Greece and Spain and acts as a harbinger for recovery prospects for 16 member states. The euro was also dealt a blow by its central bank as it announced that it believes that $283bn will be lost by commercial banks headquartered in the EU. Moody’s, the credit ratings agency, also downgraded 25 Spanish banks as the quality of their assets has fallen during the credit crunch.

It is an important data day today with the main crosses ideally needing to be shown their path for the next month or so. UK CPI and RPI are due at 09.30 while EU ZEW Economic sentiment is posted at 10.00. US PPI is expected at 0.6% at 13.30 although dollar data has been overshadowed already by a statement from Russian President Dmitry Medvedev which brought his desire for a supranational currency back to the table.

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Please feel free to contact me jeremy.cook@worldfirst.com(jeremy.cook@worldfirst.com) if you have any questions or thoughts regarding these updates or if you are interested in a particular event in the calendar. If you would like to discuss your foreign exchange requirements, please contact our: Corporate Foreign Exchange on 020 7801 9050 or ourPrivate Client Currency Exchange on 020 7801 9080. Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice. Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms..

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