Daily currency report

The dollar hovered near a two-year high against the yen, supported by receding expectations of a Fed rate cut later on this month, however, this was dulled by a mood of caution ahead of this week's meeting of G7 finance ministers in Washington.

GBP
The sterling ended the day more or less where it began with traders still undecided as to whether they should once again back the pound on the exchanges. Trading this week promises to be livelier as the release of key economic data is expected to shed new light on monetary policy in the coming few months.

USD
Data showed that US retail sales rose solidly in September while inflation pressure appeared largely muted suggesting that the economy remains on track in spite of a weakening housing sector. Consumer spending power led investors to conclude the Fed was less likely to lower interest rates in its next meeting and dampened speculation that the world's largest economy may be heading towards recession.

EUR
Financial market turbulence has failed so far to dent the eurozone economy and inflation dangers remain, ECB policymakers said. The ECB was expected to tighten further until spill over from the sub-prime problems caused interbank lending markets to freeze up in mid-August. Now the bank is also coming under growing political pressure as fears grow that euro strength may affect the economy's import export sector.

JPY
BoJ Governor Fukui said that uncertainties remain in the global economy including a downside risk to the US economy. His remarks suggested a more cautious view than at the previous branch managers meeting in July, when he did not cite such a risk to the economic outlook.

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