The Bank of England and European Central Bank left monetary policy unchanged. ECB’s Jean-Claude Trichet said that “strong vigilance” was warranted to maintain price stability. Attention will turn to UK data where industrial and manufacturing output figures will be released. Sterling’s losses are expected to remain limited, however, in front of next week’s CPI and employment figures. In the US, weekly jobless claims disappointed, but the bad news was offset by upbeat trade figures that showed exports rising by a record amount. The news helped to turn equity markets around, but already risk appetite is waning. The Swiss franc stands to gain as Swiss markets are closed on Monday for a public holiday. Speculative investors closing out positions could be tempted to park funds in the safe haven until markets there reopen on Tuesday.

Sterling

The Bank of England decided to leave its monetary policy unchanged and did not provide a statement with the rate announcement. Markets will turn their attention to the release of industrial and manufacturing output figures as well as PPI data.

US dollar

The US dollar was lifted by a bout of euro selling which took place during the ECB’s press conference. Further gains were seen in the overnight session after Chinese trade figures were released, with data suggesting that global growth could be slowing. As a result, the dollar has benefited as risk appetite dries up.

Euro

The movement seen in during Mr Trichet’s press conference, where he signalled that ‘strong vigilance’ was needed to maintain price stability, was typical “buy rumour, sell fact” behaviour. Mr Trichet also indicated that the central bank would continue to provide unlimited funding for the next several months. ECB staff projections for growth and inflation were revised higher for this year, but the inflation outlook for 2012 was not as high as some market participants had expected, suggesting rate increases could occur at a slower pace.

Japanese yen

The Japanese yen continues its upward trend against the US dollar, which is helping it make gains in other currency crosses. Speculators appear to be convinced that the coordinated intervention that took place in March is now less likely to occur and as a result yen gains can resume uninterrupted.

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

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