Ratings agency Standard & Poor’s fired another warning shot across the bows of sterling with a suggestion that the UK’s prized AAA status is still under threat. The emergency Budget doesn’t seem to be making much of an impression and although the October spending review could yet prove the saving grace, there’s clearly concern that the country could slip into a double-dip recession first. Safe havens still prove alluring and sterling-Swiss franc is once again testing territory below SFr1.6000. The current IG Index price on the pair is SFr1.5980-SFr1.5983.
But the recent rally in euro-sterling appears to be faltering after yesterday’s higher-than-expected UK inflation numbers. A risk of a break below £0.8320 could well target a move back towards £0.8220, although watch out for resistance capping any gains at £0.8400. CMC Markets has a spread of £0.8352-£0.8354.
And although the euro has appeared to be looking firmer against the US dollar, traders should still be extremely cautious. The issues surrounding the single currency are far from over and so traders should look to short euro-dollar around the $1.2750 region for a longer term move. FairFX are currently quoting a spot price of $1.2670.
Dollar-yen dropped to the nine-day simple moving average at ¥88.05 yesterday, having met strong resistance around the ¥89 level. Some of the sell interest was said to be linked to a ¥748bn share offering for the Japanese bank Mizuho, which could give the yen some near-term support. Spread Co has a spread on the pair of ¥88.07-¥88.10.
The recent rebound in the oil price continues to boost the Canadian dollar in the short-term and while oil remains strong, look to sell US dollar-Canadian dollar for a move towards Ca$1.0220. CMC Markets’ spread on the pair is Ca$1.0311-Ca$1.0315.