Weak economic data in the US released and fear that the Fed’s Chairman will not allude to Quantitative Easing 3 at the coming speech in Jackson Hole sent equity markets in the US lower. As a result, safe haven currencies such as the Swiss franc and to a lesser extent the dollar benefited. The decline in sentiment has spilled over to Asia where markets are trading lower as well.

Sterling

The CBI distributive trades report did not live up to the surprise seen in the industrial trends report. Indeed the data released showed that consumer demand had weakened at its fastest pace in over a year. Initially sterling was little changed, but as the weak data began to weigh on the outlook for the UK economy, a bit of profit taking on long sterling positions set in.

US dollar

News that famed investor, Warren Buffet, would place $5bn worth of investment with the Bank of America was not enough to keep equity markets in positive territory. Weak economic data released coupled with uncertainty over what would happen in the speech by Fed chairman Ben Bernanke helped lift the safe haven dollar as well as the Swiss franc. Weekly jobless claims unexpectedly picked up and prompted speculation over next week’s non-farm payrolls release.

Euro

The German consumer, investor and business confidence all turned lower this week. Eurozone flash PMIs were mixed, but none of the data was very encouraging. France’s President Nicolas Sarkozy was reminding in Beijing that he should protect China’s investment in the eurozone. In the meantime, markets had to sit and wait for politicians to return from holiday so that real negotiations over the July 21 deal made in Brussels can get underway in the various national parliaments.

Japanese yen

The Japanese yen opens slightly lower after inflation figures were released. Consumer prices, minus the price for energy, fell 0.5 per cent on the year. The data suggests that the ongoing battle which the Bank of Japan has had to fight against deflation will not be ending anytime soon.

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

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