Sterling rose in early trade following the release of consumer price index figures. The US dollar traded lower as risk appetite increased following more strong corporate earnings results this time from technology giant, Intel. The euro wobbled in early trade following a downgrade of Portugal’s rating by credit agency Moody and a slightly disappointing German ZEW investor sentiment survey report. However, this downtrend was short lived as the euro strengthened following a very well received auction of a Greek 26-week Treasury Bill auction.

Sterling

The pound received a welcome boost in morning trade after the release of UK inflation figures. The Consumer Price Index posted a slight easing of 3.2 per cent in June compared with a reading of 3.4 per cent last month. Despite the fall, inflation remains stubbornly well above the Bank of England’s target rate of two per cent and lends further argument for a rate hike in the UK sooner than markets are expecting.

US dollar

The US trade deficit widened to $42.27 billion in May against an expected figure of $39 billion. Although exports rose, a greater increase of imports from China contributed to the biggest US trade deficit since November 2008. To know if this was what drove the US lower in the market or whether it was increased risk appetite is hard to ascertain.

Euro

The euro was sent lower in early trade after credit agency Moody downgraded Portugal’s rating. To note this simply brings their rating in line with Standard and Poor’s and Fitch but did reopen nervousness regarding sovereign debt default amongst the weaker EU countries. Despite the negative start to the day, the euro was able to regain back its losses after a successful Greek Treasury bill auction.

Japanese yen

A rally in risk appetite caused the Japanese yen to fall against all major currencies except the US dollar. Developments in China are also causing unrest for Japan.