Risk appetite has increased since the beginning of the week. Investors have shrugged off talk of Greek debt restructuring and the negative outlook S&P gave to US debt and rather turned attention towards equity markets which were supported by strong corporate earning reports. Economic data in the EU and US helped to support sentiment. Flash PMI estimates for the eurozone showed expanding service and manufacturing sectors while housing starts in the US rose above expectations.

Sterling

The Bank of England policy minutes are expected to reveal a six to three vote in favour of leaving interest rates on hold. Three members are expected to have voted for an interest rate increase. Investors will look through the minutes for signs that the Central Bank is getting closer to tightening monetary policy. A more hawkish tone to the minutes will help to support sterling.

US dollar

The US dollar’s advance that began at the start of the week suffered a small set back as risk appetite improved. Equity markets were able to turn around and move back into positive territory on strong corporate earning reports released throughout the US and Europe. The stronger earning reports came a day after S&P rating agency put a negative outlook on US sovereign debt. The negative outlook prompted investors to run to safe haven currencies and helped push the dollar higher on the notion that the warning would encourage politicians to move faster in their negotiations over deficit reduction.

Euro

The euro has shaken off fears of Greek debt restructuring, a euro sceptic political win in Finland and a sovereign debt rating downgrades this week to trade higher. Flash estimates for April PMI data helped improve sentiment around the euro. The data continued to show an expanding manufacturing and service sector in the euro zone.

Japanese yen

The yen is falling on renewed risk appetite. Economic data released provided little help and showed that Japanese exports fell 2.2 per cent year on year in March. The figures suggest that Japan’s trade balance will likely swing into a deficit as the impact of the March earthquake comes to bear down on upcoming trade figures.

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

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