Daily currency report

The dollar was again the loser in the markets as an expected US rate cut eroded the dollar's yield appeal, while the yen slipped after Japan's embattled Prime Minister resigned. On the other hand, the euro continues its surge against the dollar.

GBP
The pound lost ground against the euro while it continued to strengthen against the dollar and yen as investors moved back into riskier positions encouraged by prospects of a Fed's rate cut. The pound should continue to benefit from the problems in the US, as many believe that the Fed will have to cut rates at its next three meetings to prevent the US economy from heading into recession.

USD
The dollar took another beating on the markets as it neared record lows versus the euro, hampered by expectations of an imminent interest rates cut to counter the economy's slowdown. The dollar will remain on the back foot as the market's attention turns towards the US economy, and, as such, European currencies, especially the euro, are attracting buyers.

EUR
The euro rose to a record high against the dollar as investors moved away from the dollar into the euro following interest rates cut expectations. The euro was further boosted by Trichet's positive comments which for investors meant that the ECB could keep rates on hold for some time or possibly raise them again soon.

JPY
The yen slipped against most of the majors after media reported that Prime Minister Shinzo Abe had resigned, prompting traders to sell the yen, and with investors now keener to invest back into yen carry trades, we may see another bout of yen weakness in the short term.

Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/