Daily currency report

The dollar inched up against the yen as financial markets await a Federal Reserve statement that could shed light on timing of a possible interest rate hike later on this year. After last week's selling on renewed concerns about the US economy, the dollar may be supported as traders adjust positions ahead of the Federal meeting.

Sterling (GBP)
The sterling fell against the dollar after a Bank of England policymaker indicated that interest rates may not have to be raised by as much or as quickly to cool inflationary pressures as many expect. Andrew Sentance said current headline inflation is temporary and that weak economy and housing market should help offset rising prices over the next year.

US Dollar (USD)
Monetary policy is again expected to come into focus in the currency markets, with the Federal Reserve's rate decision and policy statement on inflation. While the US Central Bank is not expected to move rates from the current two per cent, the FOMC's statement will be scanned for further evidence of its commitment to fighting inflation. Adding to upwards pressure on prices was oil, which went back over $136 a barrel.

Euro (EUR)
The euro fell after data showed German business sentiment and the eurozone's manufacturing and service sectors contracted in June, denting expectations for a rate hike by the European Central bank. With more data out, traders said weak readings could push the single currency lower against the dollar.

Japanese Yen (JPY)
Weak economic releases, spelled losses for the yen, as supermarket sales figures showed a decline due to apathetic spending on household and clothing items, confirming suspicions that businesses continue to suffer from the recent rise in oil prices.

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