Outstanding trade figures released from Germany are helping the euro to take back some of last week’s steep losses. Germany’s trade figures showed a record surplus of €15.2 billion as exports rose by a record amount.suggesting strength in the German domestic economic recovery. The euro suffered extensive damage at the end of last week on the back of improved US economic data, as well as less-than-hawkish comments from European Central Bank’s Jean-Claude Trichet at last week’s press conference following the central bank’s policy announcement. In the UK all eyes will be on the release of the central bank’s quarterly inflation report.

Sterling

This week’s focus in the UK will be squarely placed on the Bank of England’s quarterly inflation report. Investors will look at the central bank’s new outlook on inflation and use it as a gauge for policy direction. A report that shows the fan chart for the bank’s inflation outlook lowered, would limit sterling’s ability to make gains.

US dollar

Non-farm payrolls helped to catapult the dollar higher, coming in above market expectations at 244,000. The unemployment rate jumped back to nine from 8.8 per cent, however. The initial jobs data may have looked encouraging and helped prompt a reversal of dollar short positions, but in truth the rise in the rate of unemployment was the first since November and at fewer than 300,000, growth in the non-farm payrolls sector is tepid at best.

Euro

The euro suffered over a three per cent decline against the US dollar over the last two trading sessions. The decline against the dollar helped to weaken the single currency against most other major crosses. A drop in German factory orders suggests a drop in competitiveness possible from the recent strength of the euro. The dampening impact of last week’s figures has already eroded however with the release of German trade figures which saw a record surplus.

Japanese yen

The Japanese yen has had a sleepy start to trade in Asia after investors come back from nearly a week long holiday. The release of the Bank of Japan’s minutes from its last policy meeting failed to inspire traders and left the yen little changed.

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

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