The biggest driver was once again risk appetite as investors ditched the dollar in favour of higher-returning assets. The euro proved again to be the biggest winner as clear signs the eurozone is back in economic growth territory continued to emerge. Sterling benefitted from appetite for risk however weaker than expected UK retail sales data brought back doubts in the markets and the pound's earlier gains couldn't hold up.

Sterling

Initially the pound had pared some of its recent losses against both the dollar and euro on the back of resilient risk appetite, however sterling slightly pulled back from session highs after softer than expected retails sales data was released.

US dollar

The dollar fell broadly, hitting a one-year low versus the euro as views on a global economic recovery sparked investors to move to higher yielding currencies and assets. The dollar briefly extended gains against the yen after the US Labour department reported that initial state jobless benefit claims fell to 545,000 in the latest week from 55,0000 the week before.

Euro

The euro held strong as it continued to benefit from appetite for risk. The 16-member bloc's trade balance posted a larger than expected surplus in July, boosting hopes that the eurozone will return to growth in the third quarter.

Japanese yen

Both the Bank of Japan's governor, Massaki Shirakawa, and the newly appointed finance minister, Hirohisa Fujii, said a stronger yen could help support the economy over the long term. The seeming optimistic approach to the yen's appreciation is a marked departure from Japan's traditional stance in favour of a weak yen.

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