Daily currency report

The markets finally broke out of tight ranges as mixed equity data, comments from the US government and sharply lower oil prices swung the US currency, ending the day stronger against the majors.

Sterling (GBP)

The sterling ended trading lower against the dollar but managed to make small gains against the single currency and yen. The moves against the dollar came amid falling oil prices and comments from Federal Reserve members strengthening the interest rate outlook for the US economy.

US Dollar (USD)

The US banking industry continued its rollercoaster ride as Wachovia, the country's fourth largest bank announced a record $8.9 billion Q2 loss. Elsewhere, poor results from American Express, Texas instruments and Apple all weighed on the dollar before the Treasury Secretary and Philadelphia Fed president Charles Plosser came to the rescue. Mr Plosser stated that rising inflation could force the Federal Reserve to raise interest rates in spite of the economic slowdown. This, coupled with a sharp fall in oil prices, helped the dollar to finish higher against the majors.

Euro (EUR)

The single currency ended down versus the greenback following the dollar's impressive gains due to Mr Plosser's comments. With little key economic data out from the eurozone over the past couple of days the single currency has been taking direction from elsewhere. Despite the drops, the euro remains strong as the outlook for interest rate hikes in the eurozone is still higher than that of the other majors.

Japanese Yen (JPY)

The Japanese government cut its economic growth forecast for the fiscal year to 1.3 per cent. The government cited rising energy and raw material prices, a US slowdown and a stronger yen were hurting the economy.