THOSE surprise inflation figures yesterday have served to put back the prospect of an MPC rate hike further still and it’s weighing hard on the pound as a result. With the Eurozone now temporarily over its sovereign debt crisis and rates starting to tick higher in Frankfurt, it’s perhaps no surprise that euro-sterling is rallying. Many are now eyeing a test of the 2010 highs around £0.9150 with the question increasingly becoming when – as opposed to if – we will breach this level. Current IG Index price on euro-sterling is £0.8898-£0.8900.

The New Zealand dollar hit a five month high versus the US dollar, as the value of New Zealand’s commodity exports gained for a seventh consecutive month. This could be put down to rising prices in lumber, dairy and meat. The technicals show that the pair’s relative strength index (RSI) has broken above a bearish trend line and maintains support at $0.7831. Capital Spreads quotes $0.7854-$0.7858 for New Zealand dollar-US dollar.

Since the coordinated intervention in dollar-Japanese yen last month, the yen has weakened significantly and taken the pressure off Japanese exporter’s profit margins. It recently broke above its 200-day moving average for the first time in 10 months, shifting the focus back to further yen losses. While above ¥83.50 the prognosis looks good for further yen weakness on a break of ¥85.60 CMC Markets spread is 84.279-84.297

The US dollar fell heavily on Friday after the US budget talks dragged on for much longer than anticipated. This dollar weakness along with heavy selling interest in dollar-Swiss franc has seen the pair tumble 250 pips in a week to come to within a mere 35 pips of its recent record low of SFr0.8965. It is probably not a matter of if but when this low will be tested and it will be interesting to see what the reaction will be when it gets there. Spread Co offers a spread on dollar-Swiss franc of SFr0.9007-SFr0.9010.