Daily currency report

Overview

The dollar hit a 20-month low against the euro and a two-year low against the sterling. With another quiet economic calendar, most of the market movement was down to the expectation of future interest rate decisions from the US, UK, eurozone and Japan.

GBP
The sterling hit a two-year high against the dollar and held steady against the euro, after the release of upbeat British housing data. The figures reinforced signs that rising interest rates have not yet dented demand and speculation the Bank of England might continue lifting interest rates.

USD
The source of the greenbacks weakness is hard to pinpoint, with falling interest rate differentials, central bank diversification and worries over the US current account deficit all touted as possible causes.

EUR
The euro climbed to the highest level since March 2005 against the dollar and reached a record high against the yen on speculation that interest rates in Europe will rise faster than in the US and Japan.

JPY
After four straight days of gain, the yen slipped as the Bank of Japan's Governor gave the market little confidence that he will match his words with actions.

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