Daily Currency Report
Overview
With only European trade balance data out, the market traded largely within recent ranges, although the sterling did manage moderate gains versus the US dollar and euro.
GBP
The pound is one of the few currencies that managed to strengthen against the dollar in spite of the lack of economic data. The calendar picks up with the release of the BoE's MPC meeting minutes from May, in which the bank hiked rates by 0.25 per cent. Traders will analyse the minutes for clues on whether additional tightening can be expected from the BoE, particularly following its previous statement in which it downplayed further risks to inflation.
USD
The US dollar took another aim at its five-week high versus the euro, shrugging off weak American manufacturing data and stronger eurozone data in the process, being also able to draw support from receding expectations of an interest rate cut by the Fed as inflation remains stubbornly high even in spite of evidence that the economy is cooling.
EUR
The European economy has been exceptionally resilient to the strength of the euro and Germany's VAT increase. Elsewhere, the Bundesbank president issued yet another warning over inflationary pressures, stating that with increased growth come greater threats to price stability, cementing further expectations of an interest rate hike next month.
JPY
The yen strengthened against the commodity currencies, AUD, CAD and NZD but weakened against most of the other majors. Fears that the CB could soon deliver an interest rate hike have prevented the yen from weakening further.