The euro touched near one month highs against the dollar helping to lift sterling to three month highs against the US dollar despite the weaker than expected labour statistics and dovish Bank of England minutes. Sterling took an initial loss after the news was released, but then managed to claw back those losses against both the dollar and euro. A decline in risk appetite could help bolster the US dollar and other safe havens, such as the yen and Swiss franc. The franc experienced wild swings in currency markets after the central bank announced that it was taking more measures to halt its appreciation, but those measures failed to live up to expectations, which prompted another round of franc buying.

Sterling

Profit taking on Tuesday’s gains was seen after weak economic data and dovish Bank of England minutes were released. The claimant count jumped to 31.7, which was well above the 20,000 expected and perhaps more discouraging, was the upward revision to the prior month’s data, suggesting that the labour market may be taking a turn for the worse.

US dollar

The dollar traded lower despite the slightly higher PPI data. Economic figures to be released are perhaps a bit more interesting and could therefore have a slightly bigger impact on currency markets. While inflation figures are not likely to cause panic, a return to a positive monthly release after slightly higher PPI data seen could provide some dollar gains.

Euro

The euro saw a moderate reaction to the Merkel-Sarkozy press conference, but then failed to find momentum in either direction after coming close to one month highs against the US dollar. With no significant data out in the EU, trade will likely be based on risk appetite flows at least until the US comes in and data there is published.

Japanese yen

The yen continues to hold its place near record highs against the US dollar, which is helping to maintain its strength against the other major crosses. Equity markets across Asia are trading in flat to negative territory, which is contributing to safe haven flows into the yen.

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

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