Daily currency report

Currency markets were a little subdued given such a busy calendar of economic data releases. Equity markets continued to post gains and riskier currencies remained supported by further upbeat data from Europe and the US. Sterling continued to be weighed down by weak UK data, while the European Central Bank held interest rates at one per cent, revised up future growth prospects, and signalled that liquidity boosting measures will remain in place until early next year. The news came as no surprise and helped advance demand for the euro and other riskier currencies. In the US, weekly jobless claims showed a surprise fall while pending home sales rose well above expected levels in the month of July. The Swiss franc remains close to record highs after Swiss Q2 GDP beat forecasts and retail sales showed robust consumer demand.

Sterling

Sterling is still finding gains tough to come by despite this week’s pick up in risk appetite. As a result, the pound continues to trade near recent five-week lows against the US dollar. More weak data weighed on the currency after CIPS PMI for the construction sector showed slowing expansion. Adding to sterling’s woes, Nationwide reported that house prices fell by 0.9 per cent in August displaying further signs of weakness in the housing sector.

US dollar

The US dollar continued to trade in familiar ranges although it found support from encouraging US data. More upbeat news following on from excellent US manufacturing data the day before, helped to improve the outlook on the sustainability of the US economic recovery.

Euro

The euro starts trading in familiar ranges but encouraging data did help the single currency firm against rivals. However, the single currency still remains close to recent record lifetime lows against the safe haven Swiss franc. French unemployment for Q2 fell to 9.7 per cent, below Q1’s 9.9 per cent. Solid subscription to bond auctions in Spain and France also helped to reduce concerns over the eurozone’s sovereign debt situation.

Japanese yen

The Japanese yen continues to trade close to recent 15-year highs against the US dollar and three-month highs against sterling. With no significant local data driving the currency, the yen is instead finding direction through comments from Japanese officials.

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