Daily currency report

Overview

Interest rates remain in focus with the ECB and the MPC meetings on Thursday. With inflation creeping up in most industrialised countries the market will be expecting a rise in rates from the ECB with no change expected in Britain, although the case is improving for a rate hike in November.

GBP

Sterling fell to two-and-a-half-week lows against the euro and the dollar after dovish comments from the BoE policymakers.

USD

The US dollar hit a five-month high against the yen, after a surprisingly strong Tanken Survey of Business Sentiment failed to alter the perception that the BoJ will continue to monitor growth and only raise interest rates gradually when all economic indicators are right.

EUR

On Thursday the ECB is widely expected to continue a monetary tightening campaign and raise rates by 25 basis points. The market will listen closely to the ECB president's news conference following the meeting for clues on the likely future path of eurozone rates.

JPY

Japanese business sentiment improved in September more than the market expected from three months earlier. The critical Tanken Survey came out, reinforcing the expectations that the BoJ will raise interest rates early next year.

Gerald De Giovanni, Commercial Foreign Exchange Travelex Malta (freephone: 800 77 33 22), www.travelex.com.mt

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