Single currency regains lost ground as concerns over the European banking sector slightly subsides

Yesterday saw a better than expected take up of European Central Bank 3 month loans, with €131.9 billion borrowed by European banks, helping the single currency regain lost ground as concerns over the European banking sector subsided slightly.

Even though the smaller than expected take up of ECB loans served to assuage some of the markets anxiety, some economists believe it is only a short term boost for the Euro as Europe's debt problems are deep rooted and more pressure on the single currency is "just round the corner".

Sterling suffered from slightly more dovish (a dove supports lower interest rates) comments from monetary policy committee (MPC) Posen, opposing fellow MPC member Sentance's hawkish (a hawk supports higher interest rates) remarks the day before. The comments assisted the Euro regain ground and saw Sterling fall slightly against the US Dollar. Which highlights an opportunity for currency transfers.

UK consumer confidence yesterday didn't do much for Sterling either, falling to -19 in June from -18 in May, the lowest level in six months as consumers were the most pessimistic on the economic outlook since May 2009. UK business investment was was revised higher to 7.8% in the first quarter of 2010.

In the Eurozone, the consumer price index measure of inflation slowed to 1.4% in June from 1.6% in May, remaining below the ECB's target of 2%.

In the US, yesterday's ADP employment report, a pre-cursor to Friday's more important non-farm payroll rumber, remained delicate coming in at 13,000 against expectations for 60,000. The data, along with Moody's announcement that it may cut Spain's AAA currency government bonds, meant that risk appetite remained fragile.

Overnight, Australian retail sales for May 2010 rose 0.6% compared to May 2009. The small annual rise equates to a 2.6% increase from April and another sign that the Australian economy is performing well.

Today's focus will be on manufacturing PMI realeases from the UK and Eurozone with US data including the weekley jobless number, ISM manufacturing and pending home sales filling the afternoon session. Even with this data today, many traders will be eyeing Friday's US non-farm payroll data and positioning themselves accordingly which could lead to a volatile end to the week.