Seemingly exhausted from recent charges, yesterday’s trading
was rather docile during the day, with few major moves for, or against, the
dollar, euro or sterling, this was not however a trend extended to the evening
session.

Largely range bound in comparison with this week’s
consistent dollar weakness and euro strength, the currencies stayed fairly flat
during the day, if not showing a minor adjustment in the opposite direction.

Seemingly exhausted from recent charges, yesterday’s trading
was rather docile during the day, with few major moves for, or against, the
dollar, euro or sterling, this was not however a trend extended to the evening
session.

Largely range bound in comparison with this week’s
consistent dollar weakness and euro strength, the currencies stayed fairly flat
during the day, if not showing a minor adjustment in the opposite direction.

One of the few major moves of the day saw the Japanese yen
weaken off sharply in the morning, whilst finding a sustained level in the
hours that followed. Bets on further stimulus from the Bank of Japan caused a
strong decrease in demand for the safe haven yen.

The evening was a different story, as the fragile nature of
the markets once again surfaced, as poor earnings results from Google weighed
on equities, and subsequently on broader risk appetite. Having $20bn wiped from
its market value, Google spooked investors as equity markets crumbled, leading
a sharp greenback rally against both the euro and sterling.

There was also news from the EU summit concerning the new
European Banking Union with suggestions that the supervisory body could be
operational by as early as 1^st January 2013. Whilst though not
explicitly discussed, there have also been suggestions from Antonio Samaras
that Greece will need its next tranche of funds, paid in full, and soon. These
revelations were seen as the source of euro strength against the pound that has
continued to this morning.

 

Key Announcements
Today:

• 07.00am – EUR – German PPI: remained at 0.3%
• 09.00am – EUR – Current Account: expected to increase to
  11.3bn
• All Day – EUR – EU Economic Summit
• 09.30am – GBP – Public Sector Net Borrowing: expected to decrease
  to 11.9bn
• 15.00pm – USD – Existing Home Sales: slight decrease
  expected