Philip Salter
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THE last week has been volatile, with the euro dropping more than six cents against the US dollar. The return of the Greek debt problem added an extra twist, but there are early signs of calm returning. Eagle-eyed chartists have also spotted a head and shoulders pattern over the last day – believed by some to suggest the end of the slide. IG Index quotes euro-dollar $1.4346-$14348.

The Aussie dollar was lifted after reporting that their trade surplus was wider than expected at Au$1.74bn. For most of last week, it was trading in a downtrend versus the US dollar, but it bounced back this week. The surplus was helped on by an increase in exports in iron ore and coal, but the momentum may continue with Aussie rates expected to rise further. Capital Spreads quotes Australian dollar-dollar $1.0783-$1.0784.

The Bank of England inflation report due out later today is expected to decrease the UK growth forecast for this year while increasing the inflation outlook. Anything that is perceived to be overtly dovish for rates will likely weaken sterling in the short term. CMC Markets quotes sterling-dollar $1.63592-$1.63617.

After falling to new lows last week of SFr1.4111, sterling-Swiss franc has been trying to recover this week. The flow out of sterling and into the safety of the Swiss franc is relentless though and any rallies to SFr1.44-SFr1.45 should be sold. Spread Co quotes sterling-Swiss franc SFr1.4350-SFr1.4357.

The Australian dollar recovered ground lost by last week’s fall in world commodities and looked set to post a new all-time high against the pound yesterday, largely due to a revision of growth forecasts in the UK. Spread betters are waiting for the pairing to set new all-time lows below Au$1.5122 before looking at placing buy orders with a view to sterling bouncing. Spreadex quotes sterling-Australian dollar Au$1.5147-Au$1.5162.