Daily currency report
In line with improved market sentiment, the pound and the beleaguered euro rose especially against the safe haven US dollar which found itself under pressure from this greater risk appetite. A belief that sterling had been oversold following rating agency, Fitch's less than positive outlook for the UK economy allowed the pound to gain some ground. The euro too rose from lows not seen since 2006 against the US dollar. Improved market sentiment since the meeting of European Financial ministers and positive Chinese export figures, of which the EU is a prime destination of goods, allowed the single currency to make some gains.
Sterling recovered some of its losses, on the back of both improved market sentiment and views that sterling had been oversold. Sterling had taken a tumble following rating agency Fitch's comments surrounding their belief that the British government's austerity measures were not far reaching enough to totally rule out the risk of a sovereign debt downgrade.
Profit taking saw the US dollar heavily sold off and giving the greenback reason to fall against a basket of currencies. The US dollar had reached a four-year high against the euro allowing plenty of scope for profit taking, with markets bolstered by renewed risk appetite and a more positive market sentiment. Comments from Federal Reserve Chief, Ben Bernanke, allowed equity markets to rally, as he once again stated that the US economy was still well on the road to recovery.
The euro was allowed a brief respite as improved market sentiment and rising global stocks allowed the single currency to claw back some of this week's losses, especially against the US dollar. Chinese export figures largely supported trade into the euro following a report showing exports rising 50 per cent in May. This gave confidence to investors who feared that with Europe being a primary export market for China, the recent credit fears on the continent could begin to affect the world economy as a whole.
Japan's economy expanded by 1.2 per cent in January-March from the previous quarter, allowing Japanese stocks to rise on the back of this better than forecast reading.