Daily currency report

The euro’s losses were tempered after a report from a Senior Greek official suggested that the country could receive as much as €60 billion in fresh aid by as early as next month. Attention will be placed in the UK when the Central Bank releases its quarterly inflation report. Investors expected to see the bank’s growth forecast revised lower, while its inflation outlook is seen as little changed. While the euro’s upside is limited so too is the dollar’s. The price of oil has spiked and risk appetite in the broader market has improved, which are both seen as dollar negative events.

Sterling

The Bank of England will release its quarterly monetary policy report. The same report in February showed a central inflation projection in two years time, which is targeted at two per cent by the central bank, to stand at 1.6 per cent. Growth was expected to pick up to 3.1 per cent. Many feel that the report will see inflation projections more or less left unchanged while the growth projection could be revised lower.

US dollar

The US dollar saw little reaction to economic data released showing import prices rising. An improvement in wholesale inventories and sales data suggests that the economic recovery remains on track. US trade figures will be released, but are unlikely to impact dollar movements. Rather the dollar faces two negative developments. First, higher oil prices tend to weigh on the dollar and second, risk appetite has been improved on the back of Chinese economic data. The Mississippi is flooding and floods are expected to reach the oil and gas refining region in due course. The potential for damage in this region is helping to push higher the oil prices.

Euro

The euro’s slide was stopped short despite ECB’s Bini Smaghi ominous statement over whether the financial sector could survive a restructuring of Greece’s debt. Compounding activity in the euro trade was a report that a Senior Greek official said that the country could receive up to €60bn in fresh loans by as early as next month. The statement is seemingly supported by the French Finance Minister, who said that it is hard to imagine Greece returning to the debt market next year as expected.

Japanese yen

The Japanese yen opens weaker after Chinese economic data supports risk appetite. Local investors were encouraged to look for higher yields elsewhere and sell the yen in return after economic data in China supported the view that policy tightening in the world’s second largest economy may slow somewhat, which is encouraging for the global growth outlook.

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