Daily Currency Report

The non-farm payrolls report in the US left the dollar largely unchanged across the exchanges, despite an initiall rally. Elsewhere, the pound shrugged off below-forecast manufacturing data as traders continue to focus on the strong housing market, and the yen also benefited from good news following strong capital spending data released.

GBP
Sterling tested eight-month highs against the euro as traders continue to focus on recent strong housing data that has led to a growing feeling that interest rates are set to rise again this year. Analysts remain satisfied that the manufacturing sector is in robust health as the index remains well above the 50 level.

USD
The greenback received an immediate boost from the news of the non-farm payrolls, although the rally was short-lived as the figure did little to change the feeling that the Fed will now keep US interest rates on hold at 5.25 per cent. The dollar could now find itself under renewed selling pressure if traders remain convinced that the US yield advantage is likely to be eroded over the coming months.

EUR
Still buoyed by ECB President, Trichet's, comments, the euro rose further against the US dollar after US jobs data failed to bolster expectations for a Federal Reserve rate rise at this month's meeting.

JPY
The yen climbed, cheered by solid capital spending data that revived the possibility that Japanese interest rates may rise again this year. The yen has been under pressure in recent weeks as soft CPI figures and weak industrial output pushed the currency to record lows against the euro and multi year lows against the pound.