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The Pound is set to make a weekly gain against the US Dollar as investors increased their bets that the issues surrounding the US government shutdown and debt ceiling will make the Federal Reserve decide to maintain its quantitative easing programme and refrain from making any cuts. Sterling found support yesterday after retail sales data came in better than forecast and as this week’s jobless claims data showed that the number of UK citizens in work hit a record high.
The US Dollar is set to make a weekly decline against the majority of its peers as the markets expect the Federal Reserve to refrain from tapering its easing programme until at least next year. The ‘Greenback’ was also weakened by weaker-than-expected jobs data and the uncertainty caused by the debt ceiling and government shutdown debacle. The currency fell to a two-week low against the Pound and tumbled to an eight-week low against the Euro.
The Euro rallied to its highest level in more than eight months against the US Dollar as investors focus on the potential economic damage caused by the US government shutdown. Demand for the Dollar waned due to fears that the recent turmoil in the States could prompt the Federal Reserve to delay tapering its quantitative easing programme.
The ‘Aussie’ is on track to make its biggest weekly gain in a month after data released from China, Australia’s biggest trading partner, showed that the world’s second largest economy grew by 7.8% compared to the previous year. Against the US Dollar the currency hit a four-month high.
New Zealand Dollar
The ‘Kiwi’ is also on course to make a weekly gain against several of its peers after being supported by the positive data out of China and as expectations mount that the Federal Reserve could postpone tapering its monetary easing programme.
The Canadian Dollar strengthened to a two-week high against its US relation as speculation grows that the Federal Reserve will maintain its monetary stimulus programme in a bid to counter the effects of the disruption caused by the US government shutdown. The latest Canadian inflation rate data is due for release later in the session and is expected to show a slowdown.
South African Rand
The Rand fell against the US Dollar as investors were spooked that unrest could return to South Africa’s troubled labour force. A senior member of the NUM union was shot dead overnight in the restive platinum mining region, sparking concerns that further violence could follow if the killing proves to be related to union rivalries.