Daily currency report

Risk aversion and profit taking once again came into play as US economic data, while positive, was not quite as good as markets had anticipated. This, combined with disappointing retail sales data was enough to tempt investors back into the relative safety of the greenback. Adding momentum to the dollar's rise were lingering concerns over the state of Greece's fiscal deficit. While Greece is unlikely to be obliged to quit the euro, these concerns were enough to drive the euro lower on the exchanges with the US dollar and sterling benefitting the most. In the absence of any key data released in the UK, the pound took its direction from trading in other currencies, ending the session higher against the euro, but slightly lower versus the US dollar.

Sterling

The pound has appreciated pretty much across the board as economic data showed signs of moderate improvement. Retail sales figures came in much higher than expectations, and the UK trade deficit was shown to have narrowed by far more than analysts had hoped.

US dollar

The US dollar benefitted from lingering concerns over the state of the euro zone given Greece's ballooning fiscal deficit as well as a desire from investors to square up their positions prior to the long weekend in America.

Euro

The euro came under huge selling pressure in the latter part of the week, losing ground against all the other major currencies. The catalyst for the single currency's sharp decline proved to be Jean Claude Trichet's press conference in the aftermath of the European Central Bank's decision to keep interest rates on hold.

Japanese yen

The Japanese yen traded within recently established ranges even though economic data continues to point to underlying weakness in the economy. Most notably, business spending appears to be on the decline and machinery orders fell by 11.3 per cent on the month.