After a relatively quiet day’s trading the pound’s fortunes have completely reversed. The US dollar benefitted from the poor UK data, coming off six-month lows against sterling. The move alleviates some of the pressure on the greenback after the much worse than anticipated non-farm payroll data. However, gains may be limited ahead of the Federal Reserve’s interest rate decision. The euro was the big winner, benefitting from some positive data releases in Germany and a better than anticipated EU Sentix survey reading.

Sterling

After a quiet session, sterling has been hit by a fall in retail sales and house prices. The British Retail Consortium reported that sales fell to 0.5 per cent in July from June’s 1.2 per cent reading. The pound had started off the week with a subdued performance. In the absence of any key data releases sterling traded within recent ranges hovering just above six-month highs against the US dollar and maintaining a healthy level against the euro.

US dollar

The dollar was left licking its wounds after a terrible non-farm payroll reading on Friday. The dollar was sold off as the release capped off a week of below par data releases which had raised concerns that the US recovery had stalled. A quiet day’s trading allowed the greenback a moment’s respite although it still remained at lows across a range of currencies. Better than expected data from the eurozone saw the dollar slip further against the single currency. However, losses were limited in a day of think liquidity.

Euro

The euro received the biggest cheer in an otherwise uneventful trading session. Data from Germany was, in the main, positive. The German trade balance rose to €12.3 billion in June. Although this was slightly under market predictions of a €12.5 billion rise, it still beat the prior month’s reading of €10.6 billion. There was more good news from Europe’s largest economy as exports and imports rose in June.

Japanese yen

The big event in the Far East was the Bank of Japan’s interest rate decision for August. It came as no surprise to markets that the bank kept its interest rates on hold. The bank did not make any changes to currency policy and there was no talk of intervening in markets to weaken the yen.

Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/

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