Minutes from the Bank of England’s monetary policy meeting

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Daily Currency update

Pound Sterling

The Pound has weakened against the Euro and US Dollar as good news emerged from today’s job figures. UK unemployment has dipped to 8.1%, a figure better than the 8.2% rate in America.

The currency’s drop comes after Julys Minutes from the Bank of England’s monetary policy meeting show that two board members opposed this month’s £50bn increase in quantitative easing. They argued that the recent fall in inflation was due to a fall in oil prices that could not be relied upon, and that other credit measures such as the BoE’s Funding for Lending scheme would give enough help to the economy. Other members disagreed, and even considered raising the asset purchase target by £75bn. The committee rejected the idea of cutting interest rates, a decision that has weighed upon the Pound.

Currently the Pound is trading in the region of 1.271 against the Euro and 1.562 against the US Dollar.

US Dollar

The ‘Greenback’ fell against all 16 of its most-traded counterparts except the Japanese Yen as investors betted that the Federal Reserve may still implement further monetary stimulus into the American economy. The currency had posted gains ahead of the congressional testimony by Fed Chairman Ben Bernanke but fell after investors were disappointed at the lack of any signs that the measures are being prepared to be implemented.

In his testimony to the Senate Banking Committee, Bernanke said the economic recovery was being held back by anxiety over Europe’s debt crisis and the path of U.S. fiscal policy, and expressed unease over a stagnant jobs market. Bernanke’s comments on the economy, especially on the jobs market, suggested the central bank could opt for further monetary stimulus.

Currently the Dollar is trading in the region of 0.814 against the Euro, 0.639 against the Pound and 79.0445 against the Japanese Yen.

The Euro

After the Fed chairman’s mixed messages over the US economy and the non-committal to further quantitative easing the Euro embarked on a rollercoaster journey in the overnight trading session. It slipped to a low of 1.218 before climbing again to the 1.230 region.

Today the single currency is making limited gains against the US dollar. The Euro rose off an overnight low of 78.27 pence versus sterling, its lowest since November 2008.

Currently the Euro is trading in the region of 0.785 against the Pound, and 1.227 against the US Dollar.

Australian Dollar

The ‘Aussie’ touched a fresh two-week high against its US relation following the outcome of yesterdays Federal Reserve congressional hearing. The Australian Dollar held a three-day advance after the country’s leading economic indicator rose to the highest level since August.

Currently the ‘Aussie’ is trading in the region of 0.839 against the US Dollar and 1.030 against the Euro.

New Zealand Dollar

The ‘Kiwi’ has slipped to a seven week low against its Australian counterpart after traders predict that the country’s reserve bank will cut the official cash rate over the coming year.The ‘kiwi’ fell to 77.21 Australian cents from 77.53 cents yesterday, holding near its lowest level since May 28th. Weaker dairy prices also weighed on demand for the kiwi dollar, as trade-weighted prices fell 0.9%, led by a 6.4% decline in whole milk powder.

Currently the ‘Kiwi’ is trading in the region of 0.795 against the US Dollar, 0.647 against the Euro and 0.509 against the British Pound.

Canadian Dollar

The ‘Loonie’ ended yesterday’s trading session higher against its US neighbour after the Bank of Canada decided to leave its key rate unchanged at the 1% mark and indicated that it was still leaning towards raising interest rates in the near future. The commodity sensitive currency also benefitted from rising oil prices. The Canadian Dollar has slipped slightly today after the price of copper dropped following the Federal Reserve chairman’s speech last night.

Currently the ‘Loonie’ is trading in the region of 0.987 against the US Dollar, 0.803 against the Euro and 0.631 against the British Pound.

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