Europe

The Euro tumbled to an 8-month trough against the U.S Dollar on Wednesday on diverging rate outlooks. It plummeted to $1.3457, the least since November 2013 before fetching $1.3466, little moved from late U.S trades. The 18-nation currency was weighed down by concerns that the sanctions on Russia would hurt the bloc’s economy. It was down almost 0.1% to 136.5295 Yen after earlier touching 136.4170 Yen, the lowest level since November 13, 2013. In the afternoon the currency may extend losses following the release of the Consumer Confidence survey for the whole Euro-zone given the negative indicators out recently.

Sterling erased earlier gains after minutes of the BOE’s July policy meeting showed a unanimous vote to keep interest rates unchanged. Investors are now awaiting BOE Governor Mark Carney’s speech in Glasgow later in the day. The Pound rose to an intra-day high of $1.7093, before standing at $1.7044, down 0.1$ from yesterday’s close. Against the single currency, the Pound traded at 1.2656 Euro, down 0.2% after as appreciating as much as 0.2% to $1.2698, the strongest level since August 2012. It plunged to a 3-week trough of 172.7326 Yen before fetching 172.8730, 0.2% below Tuesday’s close.

North America

The U.S Dollar hit 8-month high versus the Euro amid divergence in the two economies monetary policies. Markets still expect the Fed to continue tapering its bond purchase programme and to raise interest rates in the latter half of 2015 while the ECB is widely expected to ease policy further. The Greenback traded little changed at $1.3466 per Euro, having touched $1.3457 earlier today, a level unseen since November 20, 2013. Against its Japanese peer, it was slightly down at 101.3941 Yen.

Around the world

The Yen remained higher amid prospects of more sanctions against Russia kept risk aversion on the table. Japan’s currency also found comfort in BOJ Deputy Governor Hiroshi Nakaso’s statement. Nakaso said that Japan’s economy is likely to reach an inflation rate of about 2% in 2015. The Yen was up almost 0.1% to 101.3941 per Dollar, lingering near its 5-1/2 month high of 101.1213 hit on July 17. Against the common currency, it inched up 0.1% to 136.5295 per Euro after earlier reaching 136.4170 per Euro, its highest level since November 13, 2013.

Meanwhile, the Australian Dollar strengthened versus all of its major peers after the closely watched inflation data topped expectations and reduced the chance of an interest rate cut in the near future. The Australian Bureau of statistics reported that consumer prices showed the expected 0.5% in the second quarter and were up 3% from a year earlier while the trimmed mean measure rose 0.8% in the quarter and 2.9% over the year. The so-called Aussie rocketed 0.6% to $0.94.48, the strongest level since July 02. Against the single currency, it climbed as high as 70.20 Euro cents, unseen since Nov.10 before standing at 70.12 cents, still up 0.5% from late U.S hours. Australia’s Dollar soared 0.5% to a 3-week high of 95.7773 Yen and last bought 95.7685 Yen.

New Zealand’s Dollar tumbled to a 6-week trough against its cross-Tasman counterpart after data showed that inflation accelerated to its fastest pace in 4 years in the bigger nation ahead of RBNZ’s interest rate review tomorrow. Reserve Bank Governor Graeme Wheeler is expected to hike the rate tomorrow for the fourth time this year, taking the benchmark to 3.5% and this would surely boost the local currency while markets ignored Finance Minister Bill English’s statement that the currency is “unsustainably high”. The Kiwi fell as low as AU$0.9194 before fetching AU$0.9199, down 0.315 from late U.S trades. It added 0.3% to $0.8690. The Kiwi rose 0.3% to its highest in a week at 64.57 Euro cents and inched up 0.2% versus Japan’s currency, last standing at 88.0866 Yen.

Interbank Rates

GBP/EUR    1.26552
GBP/USD    1.70461
GBP/JPY    172.855
EUR/USD    1.34697
EUR/JPY    136.589
USD/AUD    1.05823
USD/CAD    1.07220
USD/NZD    1.15083
USD/JPY    101.404