Daily currency report

The yen posted large gains against other major currencies while the dollar was sold in the wake of incredibly poor housing data, although it managed to hold strong against the sterling.

GBP
The sterling fell against the dollar and the euro as UK housing figures suggested the sector was beginning to feel the pinch from recent BoE interest rate hikes. Despite this news it's believed that interest rates will rise to six per cent by the end 2007, with the BoE's next chance of tightening the monetary policy next Thursday.

USD
Although the dollar made good ground up against the sterling it hit a fresh three month low against the yen with market players keen to take profit on the yen's surge after US share prices declined sharply. Traders suggested that more sell-offs in global equity and credit markets would spark further unwinding of carry trades giving the yen more strength against the high yielding dollar.

EUR
According to the monthly Ifo Business Confidence Survey, business confidence has suffered the effects of higher interest rates in July and also of a very strong euro with the business climate index for Germany in July fell to 106.4 from 107.0 in June.

JPY
The yen hit a three month and six week high against the dollar and the euro respectively as a sell off on credit and stock markets forced investors to cut back on risky carry trades. Japan's core consumer price index fell for the fifth straight month in June however, it's not likely to be enough to sway the BoJ from an expected near term hike in its key overnight call rate target.

Commercial Foreign Exchange Travelex Malta, freephone: 800 77 33 22, www.travelex.com/mt/