The Japanese yen traded back to its multi year lows, hitting 123.73 against the greenback in overnight trade as Trade Balance data showed a far smaller surplus than originally forecast.

The minutes of last month's BOE Monetary Policy Committee meeting revealed a far closer vote to raise rates than the market anticipated, indicating that the UK Central Bank maintains its hawkish bias even in the face of cooler inflation gauges and slowing consumer demand.

The old FX maxim that return follows yield was never more accurate than today as currency trading kicked off this week.

The ZEW survey of German investor confidence unexpectedly declined to 20.3 from market forecasts of 29.0 as higher interest rates, higher energy costs and higher exchange rates combined to dampen enthusiasm amongst participants.

Currency strategist Boris Schlossberg analyzes the major currencies for the week of June 18.

Yen’s weakness was due to the lingering after effects of Governor Fukui's non-committal stance on rate increases on Friday which suggested that the BOJ may hold rates at 50bp all the way through August.

Surprising no one, BOJ kept the overnight lending rate at 0.50%. However, it was Governor Fukui’s reluctance to commit to a rate hike in August that hurt the yen in overnight trade.

As expected, the Swiss National Bank raised rates by 25bp to a target rate of 2.50%, but the news was a disappointment to traders looking for a 50bp bump and a more hawkish message from the post announcement statement.

Japanese Current Account surplus far surpassed expectations printing at 2,279 billion yen versus 1,948 billion expected.

The pound saw the biggest action in overnight trade as hawkish rhetoric from BoE governor Mervyn King propelled the unit higher on speculation that the UK central bank may hike rates to 5.75% as soon as the next meeting of the Monetary Policy Committee scheduled for July 5.