Yesterday, despite some minor moves, trading remained fairly
subdued for the euro, dollar and sterling, whilst the yen continued its slide
against its peers.

As belief builds that the Bank of Japan will increase its
stimulus, investors are moving elsewhere to seek greater returns, a welcomed
effect for the ‘Rising Sun’. Having recently reported that exports for the year
had dropped 10.3%, the most since the disastrous earthquake, a weakening yen
will make Japanese exports more enticing.

Yesterday, despite some minor moves, trading remained fairly
subdued for the euro, dollar and sterling, whilst the yen continued its slide
against its peers.

As belief builds that the Bank of Japan will increase its
stimulus, investors are moving elsewhere to seek greater returns, a welcomed
effect for the ‘Rising Sun’. Having recently reported that exports for the year
had dropped 10.3%, the most since the disastrous earthquake, a weakening yen
will make Japanese exports more enticing.

With very little data released yesterday, there were few
major moves. Sterling continued its poor performance, dropping low enough to
reach a 5½-month trough, also slightly falling against the dollar. Bets that
the Bank of England may join Japan by increasing its stimulus helped to
contribute to the decline.

The euro’s return to strength was aided in part by Rajoy’s
Galicia regional election victory, but the seemingly perpetual timescale of
Spain’s bailout saga limited the extent of gains.

Another fairly quiet day for news may leave investors
preparing for the announcement of the UK’s GDP figure to be released on
Thursday. An expected increase to 0.6%, analysts are optimistic that the
economy’s recovery could start to gain motion. Though if disappointing figures
are released, further Bank of England stimulus would be foreseeable.

 

Key Announcements
Today:

• Overnight – USD – Final Presidential Debate
• 09.30am – GBP – BBA Mortgage Approvals: slight increase
  expected to 30.9k
• 13.30pm – CAD – Retail Sales
• 14.00pm – CAD – BOC Rate Statement
• 18.00pm – GBP – BOE Governor Mervyn King to speak