Welcome to our account of movement in the foreign exchange rates overnight.
The euro has shed half a cent across the board overnight, as EU leaders start the inevitable backtracking regarding their agreements at the EU summit.
For instance, far from letting countries access the rescue fund without conditions, as Italian PM Mario Monti initially stated had been agreed, Finland is now demanding that such countries put forward collateral, to guarantee the loans. Elsewhere, Holland too is questioning whether the basic premise of the agreement (i.e. letting indebted banks borrow rescue funds) is a good one.
Of course, this has spooked the market, signalling as it does a lack of unity among Eurozone members. The euro could hence continue its decline as the summit agreements unravel.
The USD has lost half a cent against the pound meanwhile, as US manufacturing contracts for the first time since July 2009.
The data, from the Institute for Supply Management (ISM), signals that the slowdown in Europe and China has infected the US too. This could prompt a return to recession for the States, and certainly boosts the odds of the Fed injecting more stimulus soon. That could keep the buck under continued pressure going forward.
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