Sterling declines on current account data

Story link: Sterling declines on current account data

The Japanese yen dropped to ¥156.45 versus the euro on Thursday as traders reevaluated their expectations that the Bank of Japan will hike interest rates early in 2007. The questions about an upcoming rate hike have grown out of remarks issued with Tuesday’s decision by the Bank to hold interest rates at 0.25 percent. Some analysts are now predicting that if a rate hike comes at all, it will not be until at least the third quarter of next year.

Sterling weakened versus the US dollar and the euro even though annualized GDP growth in the UK in the third quarter was revised upward, as the current account deficit rose more than expected in that quarter. The UK currency dropped 0.2 percent to £0.6715 against the euro, while it fell 0.3 percent to $1.9590 versus the US dollar.

The US dollar remained steady versus both the euro and the yen, holding at $1.2170 against the shared currency and at ¥118.40 in relation to the yen. However, the Canadian and New Zealand dollars both dropped in relation to the greenback. The Canadian dollar was 0.6 percent lower to C$1.1560 on declining retail sales in October and a report that economic growth has flattened out. The kiwi, meanwhile, was 0.5 percent lower to $0.6937 versus the US currency after new data showed that the economy in New Zealand grow at only half the expected rate in the third quarter.