Daily Currency Report

Overview

The sterling and the yen were the winners in yesterday's session as both currencies posted significant gains against the other majors.

GBP
The sterling hit a two-week high against the dollar and a three-week high versus the euro, gaining from weak dollar sentiment across the board and upbeat minutes from the BOE's latest rate-setting meeting. Potential merger activity has also helped prop up the sterling's value, with L'Oreal reportedly in the early stages of a bid for the Body Shop, and DP World announcing that it plans to acquire British ports operator P&O.

USD
The BOJ governor's comments prompted a sell-off for the greenback, encouraging traders to reverse their "carry trades", a strategy of borrowing yen at low levels of interest to invest in higher yielding currencies such as the dollar.

EUR
In the eurozone, German IFO business climate beat expectations in February coming in much better than expected, reaching a new 14-month high of 103.3 from a downwardly revised 101.8 in January. The survey is now at its highest level since 1991.

JPY
The yen surged to one-month highs against the dollar and the euro overnight. The yen had jumped against the dollar after Fukui said the BoJ's super easy policy was coming to an end and that rates would rise to a "neutral" level step by step.

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