Philip Salter
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STERLING isn’t faring well against the dollar and its case hasn’t been helped by the fact that <a href="";>UK house prices</a> didn’t really improve in June. The pound is trending lower, and has broken through its previous support level of $1.5850, which is a negative signal. Capital Spreads quotes sterling-dollar at $1.5834-$1.5836.

Risk aversion has been the order of the day this week, with the main beneficiary being the dollar. The US Dollar Index has rallied almost 2 per cent this month alone, and if the turmoil in the Eurozone continues, we could see further strength. Capital Spreads quotes $76.805-$76.835 for the Sept contract.

Falling business confidence in Australia combined with risk averse euro traders piling into the greenback has had something of an adverse impact on the Australian dollar-yen cross. In Tuesday’s trade this combination served to push the pair to three and a half month lows, but with the Bank of Japan holding its cautious tone – and cutting final year GDP forecasts close to zero – the fundamentals point towards the move being unsustainable. IG Index quotes ¥84.21-¥84.25.

With the financial stress in Europe, US investors have been looking for safe haven assets to park their money. One of these has been the Norwegian krone, with the single currency not far from four-year lows. The Norwegian currency could well continue to gain if the current crisis in Europe shows no signs abating. CMC Markets quotes euro-Norwegian krone at 7.7665kr-7.7725kr.

The euro stumbled to an all-time low against the Swiss franc yesterday on concerns of the Eurozone debt crisis spreading to Italy. Euro-Swiss franc fell to lows of SFr1.1552. Although the pairing rose back above SFr1.1600, traders were continuing to sell the pairing on fears of yet further bad news emerging. Spreadex quotes SFr1.1592-SFr1.1596.

Last week we tipped selling Australian dollar-dollar around $1.080 and buying around $1.0540, playing the edges of a well established range. It reached a high of $1.0789 on Friday and any sellers around there were rewarded yesterday morning when it dived all the way down to the support level of $1.0540, a 249 pip move in three days. Continue to play these edges with reasonably tight stop losses. Spread Co quotes $1.0616-$1.0618.