The euro opens near 15-month highs against the US dollar. The move is keeping the dollar under pressure against other major currencies. The euro advanced after the European Central Bank raised interest rates in by 25-basis points to 1.25 per cent. Oil prices remain near two-and-the-half-year highs on Middle East unrest and after a strong aftershock that was reported in Japan.

Sterling

With a widely expected decision, the Bank of England left its monetary policy unchanged. There continues to be speculation over a possible future rate increase, which is supporting sterling. The pound very close to fresh 15-month highs, while sterling has managed to hold on to small gains against the euro.

US Dollar

The US dollar opens at 15-month lows against the euro despite good economic data and hawkish comments from one central banker. The Fed said that it could imagine raising interest rates by the end of the year. The comments come after weekly jobless claims fell by 10,000 to 382,000. Additionally, consumer credit figures rose for the fifth consecutive month. The dollar continues to be weighed down by the higher oil price and by the government’s inability to come up with a deficit reduction plan.

Euro

The euro touched an 11-month high against the Japanese yen and is near 15-month highs against the US dollar. The gains against these two crosses are helping to hold the currency up against most majors. The move comes on the back of the European Central Bank’s rate hike. At the press conference following the rate announcement, Jean-Claude Trichet went to great lengths to assure markets that the increase was not a “first in a series”. At the same time he said that monetary policy remains accommodative and that the ECB would do everything in its power to prevent second round effects, which can result from higher energy prices.

Japanese Yen

The Japanese yen saw erratic trading. The yen made quick gains after another 7.4 magnitude aftershock triggered a tsunami warning for the hard hit northeast region of Japan. Once it was confirmed that more disaster had been avoided, the yen promptly gave up the advance and traded lower against most major currency crosses.

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

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