Pound Jumps to Highest Price in More Than a Year Against Euro

The Great Britain pound jumped against the euro to the highest level in more than a year as concerns about the problems of Europe made the UK currency more appealing. The sterling also advanced versus the Swiss franc, but dropped against the US dollar.

Spain had to help Valencia region with a €123 million payment to Deutsche Bank AG. Yield on Spain’s 10-year bonds rose 14 basis points as a result. Britain’s currency played a role of a haven from Europe’s woes before and it’s considered for such a role by Forex traders again.

The United Kingdom has its share of problems, making the pound weaker against some currencies, including the dollar. Still, the recent economic data wasn’t bad. The Manufacturing Purchasing Managers’ Index rose from 47.7 to 49.6 in December, while the Construction PMI advanced from 52.3 to 53.2 last month. Both indices were expected to decline.

GBP/USD fell from 1.5618 to 1.5598 as of 5:22 GMT today. GBP/CHF climbed from 1.4584 to 1.4702 yesterday and traded near that level today. EUR/GBP was at 0.8281 after opening at 0.8285 today, while it reached 0.8261 yesterday — the lowest level since September 2010.

NZD Jumps as Positive PMI Figures Spark Optimism on FX Market

The New Zealand dollar surged today as the positive reports about China’s and US manufacturing made more attractive currencies related to growth, the New Zealand one among them.

The US Purchasing Managers’ Index increased from 52.7 to 53.9 in December, showing a 29th straight month of manufacturing expansion. Both the Standard & Poor’s 500 Index of shares and the MSCI World Index climbed as much as 1.8 percent today. All in all, today’s trading session was marked by optimism and positive mood. The New Zealand currency profited from that.

The kiwi (the nickname of the New Zealand currency) jumped to 0.7906 against the US dollar — the highest rate since November 14. The NZ dollar reached 1.6499 versus the euro — the highest level since September 12. NZD touched 60.63 against the yen — the high not seen since December 18.

NZD/USD climbed from 0.7782 to 0.7902 and NZD/JPY was up from 59.81 to 60.59 as of 21:55 GMT today. Meanwhile, EUR/NZD tumbled from 1.6606 to 1.6502.

Rupee jumps over 2 pct after RBI action

The rupee jumped more than 2% on Friday and was on track to post its biggest single-day rise in more than two years after the central bank took steps to stem the currency's plunge to a series of record lows.

At 10:47 a.m. (0517 GMT), the rupee bounced to 52.67/70 per dollar from 53.64/65 at close on Thursday.

After the market closed on Thursday, the Reserve Bank of India reduced trading limits for banks in the foreign exchange market, making it difficult for market players to keep speculative positions open for a long time.

While the measures should help reduce speculative volatility in the FX market, Morgan Stanley strategists said as long as global funding strains remain, the rupee is likely to stay under pressure.

Shares of some companies such as Bharti Airtel , the country's top mobile phone carrier, gained as traders said the central bank's action will help reduce losses on its foreign debt exposure.

Before the central bank waded into the currency market on Thursday, the rupee notched up a series of successive record lows falling to 54.30 per dollar on Thursday, a nearly 20% decline from July highs.

If Friday's 2% rise is sustained, it will be the currency's biggest single-day gain since May 2009, according to Thomson Reuters data.

But analysts poured cold water on the long-term effectiveness of these moves as the attractiveness of Indian assets have dropped sharply in recent months in the backdrop of a worsening domestic economic growth outlook.

Down more than 20% so far this year, Indian stocks are among the worst performing markets in Asia.

Data showed on Monday that India's industrial output slumped more than 5% in October from a year earlier, far worse than expected and the first drop in more than two years, with capital goods output down 25.5%.

Kotak Mahindra Bank strategists said fundamentals of a weaker domestic macro conditions and overall risk aversion in the global financial markets are expected to be the main drivers for the rupee.

For now though, the rupee seems to have found a temporary footing. In the offshore non-deliverable forwards market, one-month contracts were being quoted at a slight discount of 52.70 per dollar.

The Reserve Bank of India's policy review later in the day will also provide some direction to the foreign exchange market.

While markets do not expect an interest rate cut, analysts expect the central bank to signal a stronger resolve to intervene to hold up the beleaguered currency.