Currency markets normalised somewhat after improved global growth projections from the International Monetary Fund gave investors a lift while a surge in leading equity markets also helped improve trading sentiment. The growth-linked Canadian dollar rallied to multi-week highs, and found additional support after the Bank of Canada held interest rates at one per cent but hinted that borrowing costs may soon start to rise. The Pound flirted with two-week highs after British inflation data dampened quantitative easing speculation whilst the euro found buyers after investor sentiment data from the German economy beat market forecasts. The euro also managed to hold above its recent 19-month low against the pound after borrowing costs for fell.
Sterling
Sterling made an attempt at two-week highs versus the US dollar and held near September 2010 highs versus the euro after British inflation data suggested the Bank of England may have to abandon thoughts of expanding its stimulus programme any time soon. The annual rate of consumer price inflation ticked higher to 3.5 per cent in March from the prior month’s 3.4 per cent reading, meaning the UK central bank would find it hard to justify easier monetary policy as prices move away from its two per cent inflation goal.
US dollar
Upbeat data from the German economy and improved growth projections from the Canadian central bank helped lessen demand for safe haven currencies. The US dollar accordingly lost some of its appeal to trade lower against almost all of its key rivals and was weakened further by a corporate earnings-induced surge in global equity markets.
Euro
The euro spent another session hovering above 2012 lows against several of its main trading partners after ’s sale of short-dated debt went through smoothly enough to bring down the country’s borrowing costs. The single currency also found tentative support after ’s closely-watched ZEW investor sentiment survey jumped in April to its highest level since June 2010. Still, the euro continued to trade within familiar trading ranges implying that traders remain cautious ahead of a more challenging auction of long-dated bonds in . Subdued demand could elevate concerns will soon be in need of financial assistance from European authorities.
Japanese yen
The Japanese yen has tumbled dramatically, snapping a period of steady appreciation since the beginning of the month after the Bank of Japan’s deputy governor warned markets that more monetary easing is being prepared.