Investors were encouraged into risk taking after Germany passed a key vote on changes to the European Financial Stability Facility fund. Assuming other member states now follow suit, the modifications will allow the fund more powers in dealing with Greece and other debt laden nations. Better than expected data from the UK and US also helped persuade traders out of their safe haven yen and US dollar currency piles, although the move appears to have been a temporary one.

Sterling

A choppy trading session allowed sterling to briefly flirt with one-week highs against the US dollar before falling steeply to end the day pretty much flat. Helping to fuel the pound’s rally was encouraging UK figures from the Bank of England on mortgage approvals and consumer credit levels.

US dollar

Investors threatened to unwind heavy safe haven US dollar positions in favour of riskier assets. A final reading of Q2 US GDP resulted in positive upwards revisions from 1 to an annualized rate of 1.3 per cent while weekly jobless claims fell encouragingly to 391,000 from the previous weeks 423,000. Although the news bodes well ahead of the non-farm payrolls report, the US Federal Reserve’s Charles Plosser delivered a rather cynical outlook for employment prospects.

Euro

German politicians passed the much anticipated vote on modifications to the European Financial Stability Facility emergency fund. As long as other nations follow suit, the changes will allow the fund increased flexibility in supporting member states overloaded with debt. More importantly however, Angela Merkel received an encouraging number of votes from within her coalition government as pressure grew on the German Chancellor. Accompanying the news was a drop in German unemployment levels although the statistics were offset by last month’s eurozone economic sentiment index which fell to a level of 95 from the prior month’s 98.3. Even though fundamentals are repeatedly distracting investors, their focal point remains the zone’s debt crisis.

Japanese yen

Japan delivered another warning to markets stating that the country will increase its currency intervention fund. The announcement came despite several economic indicators suggesting that the Japanese economy is recovering at a better than expected pace.

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

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