Daily currency report
Market Overview
With London markets closed for the August Bank Holiday, trading in the currency markets has been quiet.
GBP
The pound pulled back against the dollar and the yen in quiet trading as the sterling was able to capitalise on weak American data. In the UK itself, no data was released as financial markets were closed for the August bank holiday.
USD
The dollar has had mixed trading over the past week as July existing homes sales report exceeded expectations, but still dropped to its weakest level in close to five years. Although a rate cut will be the Fed's next move, there are a growing number of people calling for a cut in October rather than September as the markets remain volatile.
EUR
Like the Fed, the ECB has not made a decision about what to do with interest rates next month. The market was hoping for more clarity from President of the ECB Jean-Claude Trichet on whether they are sticking to their August monetary policy bias in favour of raising rates. However, he stated that the ECB will never pre-comment on interest rates, which indicates that they have not made a decision. Given current market conditions, most probably all major CBs will keep interest rates on hold for September.
JPY
The yen strengthened across the board on the back of US equity market weakness. News that Japan's PM will reshuffle completely his Cabinet had nominal impact on the yen. Usually political uncertainty is not good for a country's currency, however, in the case of the yen this may be for the better.
Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/