EUR/USD was the laggard for much of the European but it was a shining star in the afternoon, bursting back above 1.3107 recent trend highs and its 38.2% Fibo retracement (of 1.5145/1.1875) at 1.3125. The rally did not relent until moments before the European close when EUR/USD peaked at 1.3196. Dips were limited to 1.3162 during a quiet US afternoon and we close at 1.3171.

GBP/USD was the star pupil this morning and had a very strong afternoon, just not as brilliant as its early gains. Cable reached 1.5907 as London closed the books on its trading day. Dips were virtually nonexistent, barely to 1.5885.

EUR/GBP plunged in early London trade, bottoming at the 0.8252 area before clawing back some losses in the European afternoon, stalling just below 0.8300. Traders latched onto hopes for an eventual BOE rate hike as stubborn inflation tests the BOE’s patience. As well, press reports that Goldman Sachs forecasts the UK leading the league tables for economic growth in 2011 was a boost to the pound.

European currencies were strongly bolstered by strong risk appetites as August kicked off. Commodity currencies edged firmer in ranges today but they were not the focus of the risk trade as they so often are, today. News over the weekend that China manufacturing slowed may have kept traders from jumping into the AUD and CAD too heavily. 1.0205/1.0250 was the range in North America today for USD/CAD while AUD plied a 0.9098/0.9146 range.

USD/JPY traded in choppy fashion but was out of the limelight. It tried to rally with the risk trades as stocks, commodities and European currencies took flight but was quickly slapped lower from 86.79 shortly after the ISM figures to 86.32 lows 30 minutes later.

EUR/JPY reached 114.29 at its best (on the ISM data) and traded 113.75/114.00 for the balance of the session.