As Euro struggles US & Canadian Dollars move higher

The Euro struggled again yesterday after the announcement that Fitch had put Greek long-term government bonds on notice for a downgrade to "junk" status. It is hardly surprising to hear this and more surprising that investors take notice but it seems they do.

As the Euro sagged the US Dollar moved higher along with the Canadian Dollar. The Canadian Dollar strengthened following a stronger than expected rise in retail sales, up by 0.8% in October, and stronger than the 0.5% the markets were expecting.

Although the Euro was lower, it did better than Sterling as Sterling suffered from the public sector net borrowing figure which reached £22.8 billion, a third bigger than the expected £16.8 billion and two and a half times the size of the October shortfall. The deficit was a record and most definitely was the catalyst for Sterling's cent fall against the Euro.

An overnight increase in commodity prices helped the higher yielding currencies yesterday as the Australian and New Zealand Dollars strengthened against Sterling. The Aussie Dollar is now at the lowest level for over 15 years against Sterling with the currency transfers rate standing at £/AUD 1.5465, due in part to commodity prices, but also following the Reserve Bank of Australia minutes yesterday that confirmed further interest rate rises were likely but would be on hold for the near term. It seems that the strength of the Aussie dollar is now a concern of the RBA as prices for iron ore and coal, Australia's two biggest exports, continue to rise and pose a risk to long-term growth.

Today the third revision to third quarter UK gross domestic product (GDP). The initial guess of 0.8% growth went through its first revisions unchanged and is expected to emerge today at that same level. Also today is the release of the December Monetary Policy Committee minutes from the Bank of England. Traditionally, seven members vote to keep the Bank Rate unchanged at 0.5%, one votes for an increase in interests and one requests an extension to the quantitative easing programme. That outcome is factored into Sterling's so it will take something different to move it.

Also today the US reveals its own figure for Q3 GDP with 2.8% expected annually and 0.7% quarterly. There is no data from the Eurozone.