Daily currency report

The US dollar index, dropped to two-month lows as yen, euro and Australian dollar gains helped hold the dollar down. Improved risk appetite has lead to the dollars decline as investors give the eurozone’s financial troubles a well needed rest.

Sterling

Sterling jumped to two-month highs against the dollar, whilst staying within this week’s range against the euro, after CPI was released at 3.7 per cent year on year. The rise in inflation was the highest in eight-months, and although increases hope that the central bank will need to raise interest rates in the near term, also adds to speculation that inflation is now beyond the Bank of England’s control.

US dollar

The US dollar index opened at two-month lows as euro, yen and Australian gains weigh on the dollar. The latest release of economic data was rather lacklustre, when compared to the strong German sentiment figures. A builders’ sentiment survey came in flat versus expectations for a small improvement and the NY Fed’s manufacturing survey improved, but by a smaller than forecasted margin of 11.92.

Euro

Confidence in the eurozone remains in place for now, with the improved sentiment helping global risk appetite. Supporting the mood in the euro zone was the news that Russia would carry on buying Spanish debt; that the Irish Prime Minister had survived a confidence vote, and also Germany’s ZEW investor confidence figures blew away forecasts. Investors gave EU politicians the benefit of the doubt over their discussions surrounding what to do with the European Financial Stability Facility.

Japanese yen

The Japanese yen came to life as investors kept hold of their yen in front of inflation and growth data expected from China. Strong economic data is expected to help the outlook for the Japanese export market, and therefore is benefitting the yen.

Travelex Global Business Payments Malta, freephone: 800 733 22, www.travelex.com/mt/