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Euro Regains Some Ground

The euro edged up today, recouping some earlier losses on expectations that Ireland was near a deal to get tens of billions of Euros from its European partners and the IMF for its shattered banks.

The euro was also helped after China tightened monetary policy by raising banks’ reserve requirements as traders has already been positioning for a possible change in Chinese policy. Exchange rates are still a sore point for the Chinese administration and tightening policy will only exacerbate friction between them and the Americans.

The pound has remained above 1.6 against the Dollar and still above 1.1700 GBP/EUR after high employment data spurred it on this week. It has been a good week for the pound but whether this momentum can be carried forward to next week remains to be seen.

The currency markets might remain quite mundane and range bound early next week with very little in the way of scheduled data releases on the agenda. Towards the end of the week there are a number of statements scheduled from central bankers, Posen, King, Sentence et al will be giving their views on economics, this can spur some volatility.