Daily Currency Report

Overview

The US economy is running so near to capacity that higher interest trades may be needed to reduce the risk of inflation. The sterling received an early boost following the BoE's inflation report.

GBP
Joblessness rose by 108,000 between October and December to 1.54 million - equivalent to 5.1 per cent of the workforce and the highest since early 2003.

USD
The Federal Reserve chairman's testimony was enough for the dollar to reverse earlier weakness caused by weak portfolio flows data. Net portfolio inflows totalled $56.6 billion in December, well below the $70-$80 billion needed to fund the current account deficit and foreign direct investment outflows.

EUR
The euro found itself sidelined this week and ended slightly down against the other major currencies.

JPY
Data out of Japan continues to be positive with the leading economic index increasing to 81.8 percent, above expectations of 80.9 per cent, after a large increase in November to 80 per cent from 54.5 per cent.

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