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Surging oil prices and a ravenous German economic growth rate, contributes towards a looming shadow of Euro Zone inflation. As a result, market sentiment is rife with conjecture surrounding a Euro interest rate adjustment and increasingly tied to the utterances of ECB members. ECB member, Yves Mersch shifted market balance towards a potential interest rate change, quoting an inference of ‘upside risk to price stability’. Such a statement prompted a rise in the value of the Euro, as the reality of an interest rate modification came closer.

Guest post by IGMarkets

Concerns over Middle East developments have trickled into the US dollar market as traders nested in safe haven buying, pushing the value upwards. As a consequence Sterling decreased slightly, but impending Bank of England minutes and the release of positive data from the Office for National Statistics looks set to buoy Sterling value.

Climate once again sent traders scampering, as news of the New Zealand earthquake seeped into market activity. Aussie volatility was to some extent limited in comparison to its New Zealand neighbor, but this side of the equator is becoming increasingly synonymous with extreme weather activity and as a consequence investors are seeking a safer option. Incoming fourth quarter wage data for Australia may tip the trading balance back in favor of the Aussie dollar.

Despite ratings agency Moody’s, hovering over a Yen adjustment and ultimately downgrading its status from ‘stable’ to ‘negative’. The Japanese Yen retains an aa2 rating and still remains an attractive prospect for less risky investors. As Middle Eastern volatility emerged and the Yen represents a historically stable currency outside of Europe, its value rose against major currencies. How long this reputation as a safe investment will be sustained depends on just how realistic and coherent future Japanese fiscal policy will be.