Money Exchange Update: Euro Slips for Second Day vs Dollar

The full force of the economic slowdown continues at pace. Before Christmas, electrical retailer Comets went into administration. Last week it was the turn of photographic equipment retailer Jessops and so far this week we have seen HMV and Blockbuster all go into administration. Who could be next?

Tomorrow’s retail sales data covering the all important Christmas retail period should make interesting reading but all the doom and gloom does very little to improve the fundamentals behind the pound.

Yesterday saw the euro slip for the second day in a row against the dollar. The comments from Luxembourg's Prime Minister and Eurogroup President Jean-Claude Juncker that the euro is “dangerously high” is weighing heavily on the euro.

Meanwhile, the International Monetary Fund (IMF) approved the release of the next tranche of Greece’s international bailout and IMF managing director Christine Lagarde noted the country’s progress but insisted that more needs to be done. After the Greek government approved a series of tax hikes and other reforms last week, a tranche of €3.24 billion in aid will be given to Athens after the IMF’s executive board gave approval to the measures taken and Lagarde applauded recent efforts stating “Greece has made progress with structural reforms, reflected in recent actions to reduce non-wage labour costs and reform the product market.” She went on to make clear that further progress is required stating “Much more remains to be done to achieve the critical mass of reforms needed to boost productivity and lower prices”.

In Germany, economic minister Philipp Rösler responded to Spanish president Mariano Rajoy's call for more stimulus by insisting that there would be no more debt-financed economic stimulus measures. Instead, Rösler favoured the current "growth-friendly budget consolidation course". On Tuesday in an interview with the Financial Times, Rajoy called for nations that can boost growth to do so while it was unreasonable to ask Spain to take expansionary measures at this time.

The dollar was little moved by the Federal Reserve's Beige Book which sees economic expansion in the US as 'modest or moderate'. It added that the economy expanded at either a modest or moderate rate in December and early January, as spending and hiring were restrained by worries over fiscal policy.