Good morning and welcome to today\u2019s foreign exchange market commentary on Friday the 6th of January.<\/p>\n
As borrowing costs for France and Italy rose, apprehension over the health of European banks have come to haunt the markets again. French 10-year bond auction can be termed successful though yield was recorded at 3.29 per cent compared with 3.18 per cent, recorded in the December 1 auction. However, the bid-to-cover ratio almost halved to 1.64 from 3.05. The weak demand is a cause for concern since the European Central Bank approved loans worth \u20ac489.2 billion to the region\u2019s 532 banks in a 3-year refinancing operation last month. Some analysts believe that the lowered confidence in French bonds points to the heightened risk of the country losing its coveted AAA rating.<\/p>\n
Meanwhile, IMF Chief Christine Lagarde said today that the euro is unlikely to vanish this year. Well, that was a little diplomatic since she didn\u2019t say it\u2019s impossible, but \u2018unlikely.\u2019 Greece is also unlikely to quit the EU in 2012, she added though the jury is still out on whether Greece should quit the EU and rejoin at a later date.<\/p>\n
Back home, the UK services sector sprung a pleasant surprise yesterday with a PMI reading of 54 against an expected reading of 51.5. This is indeed good news since all the three PMI reading have come on top and chances of the GDP contracting in Q4 looks unlikely now.<\/p>\n
GBP\/EURO \u2013 1.2118
\nGBP\/US$ \u2013 1.5494
\nGBP\/CHF \u2013 1.4785
\nGBP\/CAN$ – 1.5794
\nGBP\/AUS$ \u2013 1.5136
\nGBP\/ZAR \u2013 12.6388
\nGBP\/JPY \u2013 119.55
\nGBP\/HKD \u2013 12.0345
\nGBP\/NZD \u2013 1.9860
\nGBP\/SEK \u2013 10.7388<\/p>\n