Daily currency report

Global economies are favouring weak home currencies in order to boost export demand but the policies are widely seen as extremely protectionist.

Sterling

Sterling moved largely on global market activity. Weak US employment data allowed the UK currency to maintain levels close to two-month highs against the US dollar. Recent upbeat data on both the UK services and construction sectors have helped to ease pressure on the Bank of England to expand quantitative easing measures. However, the UK economy is seen as deteriorating and in need of further stimulus according to many analysts.

US dollar

The ADP employment report which was expected to show an additional 24,000 jobs in the US private sector instead showed 39,000 job losses in the month of September. More stimuli are expected to drive US yields lower, equity markets higher, and support recent moves of selling the US dollar in favour of higher-yielding alternatives. The US currency reached an all-time record low against the Swiss franc, eight-month lows against the euro and new 15-year lows against the Japanese yen.

Euro

The euro has risen to almost five-month highs against both the Japanese yen and British pound while breaching new eight-month highs against the US dollar. With speculation over further quantitative easing weighing on major economies, investors continue to favour the euro. Strong numbers from Germany again raised investor confidence in the euro and deflected attention away from more bad news for the bloc.

Japanese yen

Japan is yet to re-enter currency markets to weaken the yen given their unilateral move in September having limited impact. However, further intervention could see Japan face widespread criticism, similar to China who favours a weak currency to protect its exporters.

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