Daily Currency Report
Overview
US retail sales increased 2.2 per cent in January, the strongest rise since December 1999. In comparison, the UK CPI figures came in below expectations at 1.9 per cent.
GBP
The prospect for a cut in interest rates was boosted, by figures showing that inflation had unexpectedly fallen below the Bank of England's target rate, in spite of a renewed surge in oil prices.The UK CPI figures led to a sell-off of the pound which finished down against both the dollar and euro.
USD
Strong US economic data showed that US retail sales, excluding car sales, rose at its quickest pace in six years. In his speech, the new chairman of the Fed is expected to stress on the importance of new data releases and their impact on the direction of interest rates.
EUR
Eurozone growth was shown to have halved at the end of 2005, while the German ZEW survey also failed to live up to expectations. The outlook that the ECB plans to raise interest rates in the near future remains high. Reaction in the markets was mixed, with the euro posting gains against the sterling, but falling to a six-week low against the dollar.
JPY
The policy chief of Japan's ruling party called for the Bank of Japan to introduce a two per cent inflation target so as to cooperate with the government in eradicating deflation.
Compiled by Commercial Foreign Exchange Travelex Malta. (Free phone: 800 77 33 22) www.travelex.com.mt