Daily currency report

The pound rose for the fourth consecutive day hitting two-and-a-half month highs against the dollar. Sterling strength was once again mainly based on risk appetite and negative signals coming from across the pond in the US. The euro benefited from another day of ever-increasing risk appetite while the dollar underperformed for another day after more strong corporate earnings results, this time around from JPMorgan Chase, kept investors away from the perceived safe haven dollar as they took up higher-yielding currencies.

Sterling

The pound rose to a two-and-a-half month high against the dollar after further positive corporate earnings from the US. Sterling also strengthened on the back of more moderate growth forecast for the US, raising speculation of further credit tightening.

US Dollar

The dollar sank to two-month lows versus the euro and pound as well as a basket of other currencies. Weaker than expected inflation and manufacturing data added to the already existing concerns with regards to the health of the US economy. More robust corporate earnings, this time from JPMorgan Chase bank, also encouraged risk appetite and forays into higher-yielding currencies as the dollar was handicapped by its safe haven status.

Euro

The euro continued to gain strength against the dollar hitting its highest level since May 10. The euro has been one of the major benefactors of the turn in sentiment towards the dollar.

Japanese Yen

The yen rose to a one-week high against the dollar. The Bank of Japan Governor Masaaki Shirakawa, said that he was continuing to watch currency and stock price movements like a hawk. He mentioned rises in the yen hurt exports from Japan in the short-term while stock price falls have a negative impact on capital expenditure and consumer spending.