Weekly Currency Roundup

Feb 6-10, 2011
International Markets:
The dollar rose broadly on Thursday, boosted by better-than-expected U.S. employment data, while the euro slumped as investors worried about Europe's lack of progress in tackling a sovereign debt crisis. Sterling fell against the dollar after the Bank of England left interest rates at a record low despite chatter about a possible hike, and traders said a recent spike in U.S. yields set the dollar up for further near-term gains. U.S. growth picked up in late 2010 and expectations of even brisker expansion this year have driven up bond yields to about nine-month highs, though the U.S. Federal Reserve has failed to signal plans to cut short a $600 billion bond-buying program. Adding to the optimism, U.S. claims for first-time jobless benefits fell in the latest week far below forecasts, data showed. The euro, which hit a 12-week high above $1.38 earlier this month, struggled as investors drove Portuguese bond yields to their highest level since the currency was introduced in 1999. Portugal is considered at risk of becoming the next euro zone country to need a bailout, and investors are anxious about a lack of progress by policymakers in addressing a euro zone debt crisis. European leaders are to meet next month to discuss bolstering a 440-billion euro bailout fund for troubled countries
Local Money Market:
Call Money rates moved up through the week.
Local Market FX:
There was significant liquidity pressure, and there was strong demand for the greenback.
This document has been produced for the purposes of marketing and is not independent research.
Author: Shareq Husain, Associate, Financial Market Sales, Standard Chartered Bank
This memorandum is issued by Standard Chartered Bank and is based on or derived from information generally available to the public from sources believed to be reliable. While all reasonable care has been taken in its preparation no responsibility or liability is accepted for errors of fact or any opinion expressed herein.

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