Daily Currency Report

The euro was the main loser as it plunged following the release of Germany's ZEW investor confidence figures for August. The US dollar and the sterling gained on the back of this weak German economic data, and the dollar received a further boost following comments that warned that US interest rates may have to rise further in order to keep a lid on inflation.

GBP
Sterling rose half a per cent to a five-day high against the euro after weaker than expected German data hurt eurozone rate rise expectations. The wage figure indicated that the BoE might be more likely to hold off on further rate hikes.

USD
The greenback gained against the major currencies, especially against the euro, after soft German economic data. In other dollar-positive news, the President of the Chicago Federal Reserve, surprised investors by suggesting that another rate hike in the US may be needed to ward off inflation.

EUR
The single currency tumbled upon the release of sentiment data, with the German ZEW survey of investor confidence in August plunging to its lowest level in more than five years at -5.6, far below the expected 11.4 reading as well as July's 15.1. The combination of a stronger euro, persistent high-energy prices, and increased interest rates may have finally taken its toll on the European consumer.

JPY
Pressuring the yen currently are expectations of low interest rates in Japan. The greenback advanced against the yen by 0.5 per cent as weaker-than-expected supermarket and department store sales weighed on sentiment.