The US dollar came close to breaking the 100-mark and a four-year high against the Japanese yen after minutes from the most recent Federal Reserve policy meeting reinforced bullish views backing the US central bank to reduce the size of its monthly quantitative easing programme soon. Sterling has continued to enjoy an easier run in currency markets, boosted by earlier UK manufacturing data, although the British pound could face another examination following comments from one Bank of England member ahead of minutes covering the BoE’s April 17 meeting. The euro exchanged hands close to one-month highs against the US dollar but will likely face a difficult end to the week, with traders anticipating eurozone data and meeting between euro area ministers.

Sterling

The pound may continue to hold its position, supported by surprisingly positive UK manufacturing data, which added to expectations the British economy will narrowly avoid another quarterly contraction, and an unprecedented triple-dip recession. A quiet UK economic calendar subsequent to the manufacturing figures has also eased focus on sterling to an extent, allowing cable to stay close to the highs it reached following weaker-than-forecast US employment data.

US dollar

An unexpectedly early issue of minutes from the Federal Reserve’s recent monetary policy meeting caught markets by surprise, sending the US dollar higher after the notes strengthened expectations the Federal Reserve will soon reduce the size of its bond-buying programme. The US dollar predictably rallied against the yen, and is now within striking distance of four-year highs although the greenback later failed to break through some key chart levels and could find itself pinned back slightly by profit-taking.

Euro

The euro rose to fresh three-year highs versus the yen as investors continue to react to the Bank of Japan’s enormous move on monetary policy. The euro was unable to climb above a one-month high against its US counterpart, restricted by speculation the US Federal Reserve will soon start to reduce monetary stimulus while the European Central Bank is under pressure to ease its policy further amid recession in the eurozone.

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