Good morning and welcome to today\u2019s foreign exchange market commentary on Thursday the 5th of January.<\/p>\n
There was no negative news from the EU yesterday, yet the single currency got hammered. German bund auction was partially successful with the yield averaging only 1.93 pc per annum with a bid-to-cover ratio of only 1.3. The response was lukewarm and investors can\u2019t really be blamed for that. When Italian debt yields close to 7 pc, it\u2019s difficult to invest in German securities that will yield a fraction of what Rome offers to raise funds, both being denominated in the same currency. The difference couldn\u2019t be starker. A fiscal compact is indeed the way forward, though it will probably trigger a recession in some of the member countries. The biggest challenge of course lies in convincing the members not to discard the common currency in the face of people\u2019s anger. <\/p>\n
Meanwhile the British economy is not looking good as the EU crisis drags on. The Bank of England\u2019s Credit Conditions Survey showed demand for credit among small businesses dipped in Q4 and bank\u2019s expected credit demand to fall across the board. The survey also showed default rates rose for the first time in two years and banks expected the situation to worsen further.<\/p>\n
GBP\/EURO \u2013 1.2054
\nGBP\/US$ \u2013 1.5588
\nGBP\/CHF \u2013 1.4721
\nGBP\/CAN$ – 1.5821
\nGBP\/AUS$ \u2013 1.5156
\nGBP\/ZAR \u2013 12.8080
\nGBP\/JPY \u2013 119.79
\nGBP\/HKD \u2013 12.1108
\nGBP\/NZD \u2013 1.9890
\nGBP\/SEK \u2013 10.6742<\/p>\n