Appetite for risk continues to dictate currency moves

Neil Looker, Chief FX Dealer, City Index commented: "The currency markets have started the year in a risk friendly environment with equities and commodities rallying on the back of continued US Dollar weakness.

There has been some speculation that yesterday's gains in commodity currencies were positions that were as a result of positions that were taken off at the end of last year being reinstated.

Non Farm Payrolls the key

Friday's release of the U.S unemployment report will be the major event of the week and this is where the majority of FX traders will start to focus towards from tomorrow. There is an air of confidence about the jobs report after the last release was very positive and triggered a bullish US Dollar. Therefore, we may see some bargain hunting in the US Dollar from weakness over the last few sessions as we approach the jobs report on Friday.

Pimco punishes the pound

The pound has started the year underperforming this has not been helped by the announcement from Pimco the world's biggest bond house that they intend to start selling their holdings of gilts. Moving aside from the political embarrassment that may be caused with Pimco's Head of European Investments being Cabinet Minister Ed Ball's brother, Andrew Balls, the announcement has triggered many to get rid of their pound sterling positions. There is a fear growing that the UK could be heading to it's a sovereign debt crisis and the move by Pimco has only exacerbated these fears."