The Labor Day holiday in the US ensured it was a quiet day’s trading on FX markets yesterday with caution being the chosen course. Risky assets were allowed to expand higher however as further rumblings in the M&A arena and communiqués from the G20 pleased speculators.

AUD continued its onslaught against other currencies as the G20 announcement that they would continu with the framework put in place to aid countries to battle through the recession. Australian job adverts also rose for the first time in 16 months providing further upward momentum for AUD and other commodity currencies. Kiwi dollar was also strong as the Prime Minister, John Key, said the country could see positive growth in Q3.

German Industrial production allowed the euro to strengthen over the course of the day including, inevitably, against the pound. Orders rose by 3.5% which would tend to signify that German growth for Q3 should also be better than expected.

Further pressure is being exerted by Thursday’s upcoming Bank of England MPC decision. UBS have issued a recommendation to clients to sell sterling at current levels as they believe that the MPC will expand QE by an additional £25bn. 3 members voted for the additional cash last month including Governor King sending sterling spiraling lower.

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