Strong Chinese data helped to improve the outlook for the global economy. Meanwhile, new banking regulations were more lenient than expected which helped ease fears over the European banking sector. The combination of the above sparked a strong pick-up in risk appetite and the euro emerged as the main beneficiary. As a result safe haven currencies such as the US dollar and Swiss franc suffered further losses against riskier rivals. Political developments in Japan, reducing the likelihood of immediate intervention, saw the yen again reach 15-year highs against the US dollar.

Sterling

Sterling plunged overnight and opens at lower levels against major rivals despite a strong pick-up in risk appetite. Nationwide consumer confidence rose in August to 61, above July’s record 14-month low. Although confidence improved, the index remains at low levels as does confidence in the present economic situation.

US dollar

The US dollar fell to a new 15-year low against the yen after political developments in Japan eased intervention fears. The US dollar also opened significantly lower against the euro after talks over the weekend improved the outlook for the European banking sector which boosted the single currency.

Euro

The euro continued to find support from developments over the weekend which helped to ease fears over the European banking sector. Talks from international banking regulators on tough new regulations, revealed a longer than expected phase-in period for banks to get their house in order and boost their capital reserves. Immediate pressure on European banks would have placed a further burden on the eurozone area following last week’s story on bank stress tests. The news, combined with strong data from China, led to a strong pick-up in risk appetite, sending the euro higher against sterling, Swiss franc and, particularly, the US dollar.

Japanese yen

The Japanese yen once again reached new 15-year highs against the US dollar after political developments reduced the likelihood of immediate government intervention to weaken the yen.

Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/

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