Daily Currency Report
Overview
A volatile trading session suggested that further interest rate rises in the US were likely, as indicated by the US inflation figure. This proved to be short lived as Ben Bernanke made it clear that interest rate rises were in fact unlikely.
GBP
Sterling retreated from an early four-week high against the euro and slipped slightly against the dollar after the BoE minutes pointed to steady interest rates. All seven members of the BoE's Monetary Policy Committee backed this month's decision to keep the interest rates on hold.
USD
The dollar fell sharply erasing earlier gains after Federal Reserve Chairman said that the Central Bank expects core inflation to decline as the economy slows. He expects US core inflation to fall, which helped cool expectations that the Fed will raise rates again next month, following the stir from the US inflation figure.
EUR
Producer prices in Germany came out strongly for the month of June confirming the higher inflationary conditions worldwide. The Eurozone trade balance however was wider than expected.
JPY
The performance of the yen was mixed with strength seen against the US and CAD dollar, but weakness against the euro and British pound. The lack of Japanese economic data limited the yen's movement.