Daily currency report
Sterling soared to a three-week high versus the dollar after UK employment data came in much better than expected. The pound's rise continued after the release of the Bank of England minutes which showed policymakers voted unanimously to keep monetary policy unchanged this month, with some pointing to an increase in upside inflation risks. The pound also ended the day up against the euro which lost ground versus most of its major counterparts after a German government spokesman said European Union finance ministers have made 'no decisions' on aid for Greece, damping investors' appetite for the currency. The dollar and yen weaken against higher-yielding currencies such as the Australian dollar and the South African Rand, as commitment to low interest rates from the Bank of Japan and the Federal Reserve prompted investors to seek higher returns elsewhere.
Sterling surged to recent highs against the dollar on the back of surprisingly upbeat unemployment data. The official stats showed the number of Britons claiming unemployment benefits had fallen unexpectedly in February and by the biggest amount since November 1997.
The dollar was under pressure after the US Federal Reserve held to its pledge to keep interest rates low for an "extended period". It dropped against 15 of the 16 most-traded currencies on the news that the federal funds rate target for overnight loans between banks would remain at a range of zero to 0.25 per cent, where it's been since December 2008. The dollar continued to slide after the announcement that the US producer prices in February posted their biggest fall in seven months as energy costs tumbled, validating the Federal Reserve's decision to hold interest rates very low on evidence of tame inflation.
The euro fell from five-week highs against the dollar, as sentiment remained negative on the single eurozone currency, despite European Union members' pronouncements of support for debt-strapped Greece.
The yen continued to depreciate after the Bank of Japan doubled a lending programme aimed at stoking credit growth after the government stepped up calls to arrest deflation that's hampering economic recovery.