Currencies Update

Enigma Reveals

The US dollar extended losses against the Euro as speculation persists that the Feds will lower interest rates again this quarter amid worries over the credit markets and the US economic outlook.

There is a lot of uncertainty in the markets at the moment with concerns building that the credit market will continue to perform abnormally and not to mention the concerns that the US economy might tip into a recession. Yet a slight pick up in the US existing home sales in November did little to boost the sentiment on Monday, with analysts warning sales could weaken in the future.

The outlook for the UK economy is soft for the year and it's likely to be affected by a slowdown in the US economy more than the euro zone and this has been seen as the royal pound weakened against the euro. Investors anticipate soft UK economic data and hence leading to lower interest rates. Against the Dollar, the pound is fluctuating within narrow ranges to record a high of 1.9897 and a low of 1.9786.

Meanwhile the euro is gaining new ground as a global reserve currency. However dilemma surrounds the outlook of the euro. Some think that the Euro's triumph is however an irony wrapped in a riddle. Outside the Euro Zone the currency is on a good run giving the weakening dollar. However inside the Euro Zone from Italy to Germany, believe that it is behind the increase in the rate of inflation. The euro continues to gain against the greenback pushing the pair to the upside to record a high of 1.4699 and a low of 1.4596

As for now, the yen advanced against the British Pound in early transactions today however it slightly slipped against the US dollar pushing the pair to trade within narrow ranges to record a high of 111.98 and a low of 111.32.

Analysts suggest the economic news out from the US is likely to keep the markets attention on the growth outlook though inflationary concerns remain at a time of sky-high oil prices.