Daily currency report

Activity levels were subdued with the euro in a narrow range versus the dollar as traders look to fresh factors for direction. The news that Iran test fired medium and long range missiles provoked some dollar selling, though moves in oil and stocks helped prevent the dollar from falling too far.

Sterling (GBP)

The sterling remains on the defensive versus both the dollar and the euro ahead of the Bank of England interest rate decision, even if it is not expected to make any changes with inflation well above the target level of two per cent and data continuing to highlight the downside risks for the UK economy.

US Dollar (USD)

The dollar had held fairly steady, soothed by a dip in commodity prices, easing some concerns about the impact of excessively high energy costs on economic growth and profitability. The crude oil price fell to a low of $136 per barrel, which is down by nearly $10 from the highs seen last week.

Euro (EUR)

In the eurozone, Germany's trade surplus narrowed more than expected in May as exports fell sharply and imports edged up slightly. In other news, EU finance ministers have agreed to set the Slovak currency's final conversion rate against the euro at SKK30.126, marking the last formal step for Slovakia to join the eurozone from January next year.

Japanese Yen (JPY)

Japan's core machinery orders, a leading gauge of capital spending, rose faster than expected in May, but the economic outlook still remained bleak with firms facing risks of inflation and slowing growth. Financial markets showed little reaction to the data as it is expected that the Bank of Japan will continue to keep interest rates on hold for the rest of the year.