Friday was the last real trading day of the decade with many traders downing tools until the beginning of next year. Price action was slightly volatile on Friday as a result of the decreased amount of volatility and the main beneficiary of the trade patterns turned out to be the US dollar.
It seems that investors, speculators and other market participants began to switch out of risky assets on Friday and more into the “haven” currencies to safeguard themselves over what can be a strange week of trade.
The greenback also stands to benefit from heightened tensions on the Korean peninsula after the South conducted live fire exercises in a show of force against the North, who have said in the past that such drills would be greeted with retaliatory action. Should the two start to exchange fire then expect Asian assets to slump and the USD and CHF to be the main beneficiaries.
Although, as we said on Thursday, a mechanism to deal with insolvent EU member states was agreed at the latest meeting of European leaders, this seems to be the only agreement that has been made.
The reticence to deal with other issues (sky-high bond yields, austerity measures, bank liquidity) did cause the euro to fall on Friday with EURUSD set to test 1.30 and GBPEUR back towards the 1.18 level.
The reticence to deal with other issues (sky-high bond yields, austerity measures, bank liquidity) did cause the euro to fall on Friday with EURUSD set to test 1.30 and GBPEUR back towards the 1.18 level.
The pound has not escaped untouched however, as the UK banking sector’s exposure to that of peripheral Europe has once again become a concern. Friday’s not entirely unexpected dip in consumer confidence hardly helped either; the Nationwide now puts their proprietary confidence index at 47. The falls are as a result of the planned austerity measures from the UK’s coalition government and goes hand-in-hand with the rise in unemployment seen towards the end of last week.
Latest exchange rates at time of writing
| Indicative Rates | Sell | Buy |
| GBPEUR | 1.1786 | 1.1814 |
| GBPUSD | 1.5535 | 1.5560 |
| EURUSD | 1.3164 | 1.3185 |
| GBPJPY | 130.24 | 130.51 |
| GBPAUD | 1.5695 | 1.5717 |
| GBPNZD | 2.0993 | 2.1004 |
| GBPCAD | 1.5711 | 1.5741 |
| NZDUSD | 0.7390 | 0.7412 |
| GBPZAR | 10.65 | 10.70 |
| USDZAR | 6.8397 | 6.8980 |
| GBPPLN | 4.7032 | 4.7329 |
| EURJPY | 110.36 | 110.62 |
Rates are dependent on amount transacted.
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