Daily Currency Report

The US retail sales figure was surprisingly weaker than expected, causing the sterling to hit a 26-year high and the euro reaching all-time highs against the soft dollar. The commodities markets also influenced the dollar as gold prices hit a one-month peak while traders bid up the price of oil to an 11-month high of over $77 a barrel.

GBP
The sterling hit a fresh 26-year high against the beleaguered dollar. A mixture of poor US data with investors fully pricing in a further interest rate rise to six per cent by the end of the year created strong enough signs to drive the GBP/USD higher. The sterling continues to benefit from its appeal as a relatively high-yielding currency, prompting investors to keep reserves in the pound rather than less yielding currencies.

USD
The dollar recovered slightly from its lows against the euro after the release of their consumer sentiment report rose to a six-month high in July due to rallying stocks. The boost in consumer confidence offset a fall in the US retail sales in June, which had pushed the dollar to a fresh lifetime low against the euro.

EUR
The euro hit an al-time high following the release of the ECB monthly bulletin, which confirmed that inflation risks were to the upside and monetary policy remained accommodative.

JPY
Further unwinding of carry trades were prompted towards the end of the week as the low-yielding yen was sold to fund higher yielding investments. There was further disappointment for the Asian currency as the BOJ board of governors voted 8-1 in favour of holding interest rates at 0.5 per cent, denting expectations of an August rate rise.

Commercial Foreign Exchange Travelex Malta (Free phone: 800 77 33 22) www.travelex.com/mt/