The Sterling rose against the dollar, snapping five days of losses, after an advanced Iranian missile test sent oil prices higher. The missile, capable of reaching Israel, was fired during war games today, state television said. Oil prices rose for the first time this week, after declining the most in three months, on concern supply from the Middle Ease may be disrupted. 'The pound rebounded against the dollar as the news on Iran pushed the U.S. currency lower via higher oil prices,' said Hans-Guenter Redeker, global head of currency strategy in London at BNP Paribas SA, France's biggest bank. 'This is a dollar story more than a pound story. In the longer term, we will see the pound as overvalued.' GBP/USD currently trading at $1.9681 as of 7:42 am, GMT.

Morgan Stanley, BNP Paribas SA and Lehman Brothers Holdings Inc. said the Bank of Japan will keep interest rates on hold because of record oil and food prices that are hurting the world's second-largest economy. Higher raw material prices reduced Japan's national income by $200 billion, or around1 percent between 2000 and 2007, a semi- annual government report showed on the 30th of June in Tokyo. That was the most among major industrialized economies. Costlier raw materials and high inflation have curbed consumer spending, data from the statistics bureau showed. Profits at Japanese companies fell at the fastest pace in six years in the first quarter, prompting companies to pare spending and hiring plans, government data showed. Japan's wages grew at the slowest pace in five months in May, indicating households will keep reducing spending as inflation rises faster than workers' paychecks, according to data released by the Labor Ministry on July the 1st. USD/JPY currently trading at 107.57 as of 7:51 am, GMT.

Canada's dollar declined the most in almost a week as the price of the nation's commodity exports, including gold and oil, fell. The currency has depreciated 0.2 percent since oil reached a record $145.85 per barrel on July 3. The nation has the largest crude deposits outside the Middle East. Oil has dropped more than $9 since the start of the week to less than $136. Commodities account for about half of the country's exports. 'We are seeing a bit of a sell-off because of lower oil prices today and yesterday,' said Dustin Reid, a senior currency strategist at ABN Amro Bank NV in Chicago. 'Natural gas is down quite a bit. Canada is a net exporter. When those prices are lower, it affects Canada's trade.' USD/CAD currently trading at 1.0178 as 8:04 am, GMT.

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