Financial Markets Review By Lloyds TSB

The pound had a volatile session this week, as rising political volatility eventually outweighed the positive impact of a promising series of UK economic data. £/$ fell 0.9% to 1.6011.

Dollar rebounds after US jobs data surprise

The pound had a volatile session this week, as rising political volatility eventually outweighed the positive impact of a promising series of UK economic data. £/$ fell 0.9% to 1.6011.

Optimism that the global economy is on the path to recovery triggered a sharp sell-off this week in government bond prices and caused a sharp rise in global yields and swap rates. US 5y swaps rose 49bp to 3.31%, UK 5y swaps shot up 33bp to 3.61%.

In emerging markets, there were notable strong gains this week for the Indonesian rupiah and Colombian peso. Eastern European currencies were under selling pressure on concerns the Latvian central bank could remove the peg to the euro and devalue the Lat.

The Australian $ was lifted by the news that the Australian economy had managed to avoid falling into technical recession after growing by 0.4% in Q1 2009. Aud/$ pushed through 0.80 for the first time since September.

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