The current negativity towards the US dollar continued to drive markets, resulting in another wave of US dollar selling and record levels being set. Sterling also remains under pressure, this time from a dovish Bank of England outlook. The BoE minutes from this month’s policy meeting showed that the MPC discussed increasing its quantitative easing programme. The news helped accelerate sterling’s recent fall against the stronger euro to over four-month lows. Despite dismal eurozone industrial data, the euro rose to five-month highs against the US dollar. Successful government bond auctions in Portugal, Ireland, Greece and Spain have given investors confidence that indebted countries in the bloc will be able to manage their deficits. Elsewhere, the safe haven Swiss franc breached two-and-the-half-year highs against the under-fire US dollar.

Sterling

Bank of England minutes from their policy meeting earlier this month revealed another 8-1 vote in favour of holding interest rates. The committee’s widely perceived “soft approach” to high inflation is lessening expectations of any rate hikes which hurt sterling. Although sterling is managing to maintain stronger levels against the equally under pressure US dollar, the pound plummeted to over four-month lows against the euro.

US dollar

The US dollar fell to over five-month lows against the euro and just under two-and-the-half-year lows against the Swiss franc. Despite direct intervention by Japan to weaken the yen against the US dollar, the yen again rose close to recent 15-year highs as by leaving the door open to more quantitative easing, the US dollar faced increased selling pressure.

Euro

Despite dismal eurozone industrial orders data, the euro continued to take advantage of a weaker US dollar and moved to new five-month highs. Dovish Bank of England minutes also allowed the euro to further pressurise the British pound posting over 4-month highs.

Japanese yen

Investors continue to dump the less attractive US dollar on fear of further Federal Reserve quantitative easing. As a result the yen remains dangerously in intervention territory. Despite a bank holiday in Japan, investors remain on alert for another round of yen selling by Japanese authorities.

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

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