Wednesday saw the English pound climb against the European Union's common currency as investors' eyes fell on the alarming height of yields on Italian 10-year bonds, Bloomberg reports.
The high bond yields, which exceed the top level since when the euro first appeared in 1999, are symptomatic of the sovereign debt crisis' invasion of Italy's banks and public finance systems as Italy has displaced Greece as the focus of the debt scourge tearing through the euro zone. Yet damages are likely to be more significant given Italy's economy is the euro zone's third largest.
"The sovereign debt crisis in the euro zone is really driving everything, with everyone keeping an eye on Italian bonds," options and advisory head Andre de Klerk with Moneycorp told Reuters. "The UK isn't part of the euro and it has a bit of fiscal and monetary maneuverability but the euro zone is our biggest trading partner and this crisis will affect the UK significantly."
The strong performance placed the pound at its top level against the euro in eight months, according to Reuters.The pound has risen in three of the past four trading sessions against the Swiss franc, Bloomberg reports.
But the pound lost ground to the U.S. dollar, which Reuters linked with investors' interests in the surety of the greenback.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.
