Currency market volatility in March 2011

The pound is enduring a volatile session on the currency markets today, with loses of 1% vs the USD, 0.35% vs the EUR and almost 2% vs. the JPY.

From a sterling point of view we’ve also had some negative economic data. UK house prices fell 1.4% from December, in January according to Department for Communities and Local Government (DCLG) figures. This has also contributed to sterling weakness.

On stock markets across the world we are seeing big losses as the Japanese disaster has a ripple effect across financial markets. This is having a knock on effect to financial markets as more transactions take place and higher volumes of currency are exchanged. This looks set to continue as events unfold in Japan.

Currencies used in carry trades (high yielding ones like the AUD, NZD and ZAR) are also volatile as many speculators are unwinding their Yen based positions. This is weakening the ZAR and AUD and strengthening the JPY.

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