Risk has returned to the financial markets and as a result riskier currencies are attracting buyers. The Australian dollar is back around parity level with the US dollar and recently broke back above the upper downward trend line, indicating that the buyers are back. Capital Spreads quotes $1.0000-$1.0001 for Australian dollar-dollar.
Spread betters were pessimistic on the pound’s situation, despite sterling making gains against the dollar on the back of a successful Italian bond auction. But the OECD’s downgrade of UK economic growth forecasts and chancellor George Osborne’s gloomy Autumn Statement both point to the potential for more quantitative easing, which would again put pressure on the pound. Spreadex quotes sterling-dollar at $1.5642-$1.5645.
Yesterday’s Autumn Statement didn’t contain too much in the way of surprises for sterling, which has gained back quite a lot of ground against the Swiss franc, since hitting lows of SFr1.1465 in August. Having broken above both its 55 and 200 day moving average it could well be set for further gains. CMC Markets quotes sterling-Swiss franc at SFr1.43385-SFr1.43465.
Appetite for the riskier euro has increased since the IMF indicated their €600bn package would cover any potential Italian default. Traders were further encouraged as Italy sold €7.5bn worth of government bonds. We should see this as a bear market squeeze and gains are likely to be limited to the short term. Capital Spreads quotes euro-dollar at $1.3395-$1.3396.