Sterling and the euro dropped slightly against the US dollar after earnings reports from the major US banks came in below market forecasts. The weaker sentiment benefited the US dollar as well as safe haven currencies such as the yen and Swiss franc. Separate US economic data also softened the mood, as new home sales dropped to one year lows. Attention in the European session drifted away from the debt crisis, and investors barely reacted to the news that Germany was considering contingency plans for a possible Greek default or restructuring of debt. This meant that the euro maintained gains made against sterling.

Sterling

Sterling’s advances were halted after soft wage data was released alongside claimant count data. The claimant count was slightly better than forecast, showing a decline of 4,100, while the rate of unemployment stayed at a steady 7.9 per cent.

US dollar

The US dollar backed away from two month lows. The dollar’s gains were held back by disappointing earning results from US banks, which sent equity markets lower. On the economic front, housing starts were also weaker than forecast. In the overnight market China released its growth and inflation figures. Officially GDP was up 9.8 per cent, which was better than expected.

Euro

Fears over the European debt crisis continue to abate, which is providing some support for the euro. Markets fluttered only briefly when news hit that Germany was considering contingency plans for Greece to further aid the restructuring of its debt. Shortly after though, the Greek Finance Minister denied any talk of restructure, which helped to ease concerns.

Japanese yen

The Japanese yen is trading slightly higher against most major crosses as equity markets across the region tumble prompting small safe haven inflows. The Reuters Tankan survey also improved coming in at +11. Strong growth figures out of China are also contributing to the yen’s gains as investors look forward to an improved Japanese export outlook.

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

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