The British pound, Australian and Canadian dollars were all up against the greenback on improving risk appetite, while the so-called safe havens were weaker today, including the yen, Swiss Franc and even the euro.
Sterling was one of the best performers out of the majors, rising for the second day against the dollar to reach a one-week high of 1.5411. On Friday it had reached a four-week low of 1.5162. There were no UK data releases today but the main risk for the pound will be Thursday’s Bank of England policy announcement and publication of the meeting minutes. All eyes will be on any clues from the central bank on when they may begin raising interest rates.
The euro had a volatile session, rising briefly above 1.12 against the dollar to reach 1.1228 before turning back down to 1.11511 and then bouncing again to 1.1190. Positive data from Europe today would normally boost the single currency but renewed risk appetite led to some selling. The euro has recently been treated as a safe haven asset. There was little impact from an upwardly revised second quarter GDP for the Eurozone. It was revised to 0.4% quarter-on-quarter from an initial estimate of 0.3%. Meanwhile German exports and imports were both firmer than expected, rising 2.4% and 2.2% month-on-month, respectively. Going forward, the euro may find it difficult to sustain any moves higher after the ECB last week hinted that it was ready to expand or extend quantitative easing.
The Canadian dollar strengthened against its US counterpart, helped by a gain in oil prices. The greenback fell to 1.3201 versus the loonie before reversing. The Bank of Canada rate decision will be eyed on Wednesday.
The yen was softer due to risk appetite, sending the dollar back above the key 120 yen level. After peaking at 120.21 it settled around 119.90. During the North American session, only minor US data is on the calendar. These include small business optimism and employment trends, both of which came in better-than-expected. US consumer credit data is due later in the session. The next top tier data from the US will be August retail sales on September 15 and the FOMC meeting on September 17.