The FOMC decided to leave its monetary policy unchanged and maintained that quantitative easing would end this month as forecast. The head of the central bank said that further quantitative easing measures would not be ruled out, but were also not likely at this time, which helped to support the US dollar. Sterling fell to two-month lows after the central bank’s minutes showed a decidedly more dovish leaning committee, which helped to weaken the pound. In the eurozone, flash PMI figures data is expected to remain in expansion territory, but weaken from prior month levels. The weakening should not be strong enough to alter the outlook for the European Cenral Bank’s MPC decision in early July. Markets continue to price in a rate increase at this meeting, but the main focus for the moment is the debt crisis and the next step in the crisis is a vote in Greece over the austerity measures. In Switzerland, the Swiss franc was lifted, not only on safe haven flows, but also on trade figures. Data showed exports rising despite the record highs seen in the franc. The data suggests that the strength of the currency has not damaged the country’s competitiveness.

Sterling

Sterling was kicked lower after the release of the Bank of England’s minutes which showed a 7-2 vote in favour of leaving policy unchanged. While on the surface the minutes appeared to narrow the gap of differences on the committee, a deeper read suggests that the division among policymakers is growing.

US dollar

The US dollar was lifted by comments from Fed’s chairman Ben Bernankewho stated that while he would not rule out a third round of quantitative easing, the chances of another round at this time are remote. The comments helped to quash market concern the US recovery was stalling and not strong enough to live without a third round of quantitative easing.

Euro

Industrial new orders did not meet market forecasts and is seen as a leading indicator for output. The data was not weak enough to interrupt an expected rate increase at July’s European Central meeting.

Japanese yen

The yen was not shaken by another strong earthquake that hit the north eastern corner of the country. Rather the currency was strengthened by safe haven flows which picked up as a result of a weaker growth outlook in the US and economic data released in China.

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

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