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Tuesday 02nd of December 2008
January 2, 2007

Sterling strengthens on new data


by Elaine Frei

With trade light as Japanese markets remained closed for the holidays and US markets were closed due to a national day of mourning following the death of former President Gerald Ford, sterling was stronger while the yen declined to a new low versus the euro and the US dollar saw declines.

Sterling added 0.1 percent to £0.6729 versus the euro and it was up 0.7 percent to $1.9723 against the US dollar even though manufacturing data was lower than had been expected. The UK manufacturing purchasing managers index was down from 52.5 in November to 51.9 in December. In addition, both input and output prices were up less than had been anticipated. According to some analysts, this took a bit of the pressure off of the Bank of England to raise interest rates again soon.

The manufacturing PMI was down in the Eurozone as well, dropping slightly to 56.5 in December from a reading of 56.6 in November. Analysts downplayed the drop, saying that demand could be impacted by the current strength of the euro and that the new figures should not be a cause for too much worry. This seemed borne out by the shared currency’s gain of 0.6 percent in relation to the US dollar, to $1.3278. The euro was also up versus the yen, by 0.4 percent to ¥157.79 after having gone as high as ¥157.90 during the session, a new record.

The US dollar dropped 0.3 percent against the yen to ¥118.80, while the Australian dollar added 0.9 percent versus the greenback to $0.7963, its highest in almost two years, as the US currency was generally weak on the session.

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