Daily currency report

The dollar gained significant as economic data released lent further support to the economy. The pound took most losses as market jitters over credit gave way to traders to sell off GBP along with AUD and NZD. Meanwhile the euro lost ground against the yen.

GBP
The sterling dropped sharply versus the dollar and hit a six-week low against the yen in a broad sell-off of high-yielding currencies, as investors cut some of their more stretched foreign exchange positions, taking profit on the pound's recent appreciation. Nevertheless, investors still remain convinced that rates will rise to six per cent before the end 2007.

USD
A surprise in US GDP boosted the greenback quelled fears of a continued US economic slowdown. The US economy grew faster than expected through Q2, registering a 3.4 per cent expansion versus 3.2 per cent expected. The Price Index was slightly subdued, however, adding weight to the argument that inflationary pressures are receding in the world's largest economy.

EUR
The euro lost ground against the yen as investors cut back on risky positions such as carry trades. Although number's don't back him up, Nicolas Sarkozy complained that the euro's appreciation against the dollar is hurting European exports. Shipments from the EC rose nine per cent in the five months to May from a year earlier.

JPY
The yen hit a three-month high against the euro as the sell-off in global equity and credit markets prompted investors to cut back on risky positions such as carry trades. However, with markets looking for stability, the crushing defeat for PM Abe's ruling party in elections could erode the yen's value.

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