Daily currency report

A lack of data in both the UK and the eurozone saw fairly subdued trading as traders were left mulling over the Bank of England's inflation report for quarter 2 released the previous day. The downbeat sentiment emanating from the Central Bank was evident in the markets as the pound remained under pressure against most currency crosses and the FTSE lost ground. In the US all eyes were focused on PPI prices for April. These came in higher than expected allaying fears of deflation for the world's largest economy and triggering a sell-off of safe haven currencies to the benefit of equity markets and higher yielding currencies.

Sterling

Sterling enjoyed a steady day's trading, as despite the gloomy outlook presented by the central bank, markets interpreted the tone as more of a caution against over-optimism following the recent signs of the global recession bottoming out rather than a premonition of things getting worse.

US Dollar

It was a mixed bag of data for the US dollar and as a result trading was, at best, choppy, at worst, turbulent. PPI figures saw producer prices jump up 0.3 per cent over a fall of 1.2 per cent in March, while oil prices fell by more than a dollar. Confidence in the US economy as a result of the PPI data boosted the desire for shorter-term gains which resulted in selling of the dollar to fund purchases of equities and higher yielding currencies.

Euro

The euro enjoyed a very quiet day's trading on, as there were no data releases.

Japanese Yen

The yen begins the session on a strong footing, particularly against the US dollar in spite of the news that Japanese machinery orders fell in March - a further indication that companies are still reluctant to spend even though recent data have suggested that the current recession may have hit a bottom.