The euro soared, hitting fresh highs against the US dollar and British pound after upbeat German business sentiment data suggested Europe’s biggest economy will help drag the 17-member bloc back towards growth. The news helped overshadow downbeat eurozone growth estimates from the European Commission while another solid US Weekly Claims figure helped boost risk appetite. Sterling found some support from British factory data that beat expectations but the pound still remains deep in the red against most rivals on quantitative easing concerns. The Australian dollar rallied following comments from the head of the Australian Reserve Bank, Glenn Stevens, who hinted at no more interest rate cuts.

Sterling

Upbeat data on British factory activity helped sterling recover after its broad tumble a day earlier which came after minutes from the Bank of England’s latest meeting kept the door wide open to additional quantitative easing.

US dollar

Rather than support the US dollar by dismissing the need for anymore US Federal Reserve quantitative easing, encouraging US data buoyed risk appetite in which the lower-yielding US dollar was again dumped in favour of better yields. Riskier currencies rose alongside equities after better-than-expected data on US weekly jobless claims pointed towards a strengthening labour market.

Euro

The euro raced to two-and-a-half-month highs versus the US dollar and to similar peaks against the British pound after a leading measure of German business sentiment rose for the fourth consecutive month. The news helped shape confidence that Germany, along with other “core” nations, will help drag the eurozone’s debt-strapped periphery back towards growth and reduce the need for any more rate cuts from the European Central Bank.

Japanese yen

The yen extended its broad decline, dropping close to October 2011 lows against its safe haven rival, the Swiss franc, after Moody’s Investor Service reminded markets that Japan is still in danger of another ratings downgrade. Furthermore, the yen’s appeal as a refuge also waned ahead of this weekend’s G20 meeting in which leaders may pledge more funding in order to bolster Europe’s anti-crisis fund.

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

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