Daily Currency Report
Overview
The highlight in the markets was the announcement that Goldman Sachs chairman Henry Paulson is to replace the current US Treasury Secretary. The news was initially positive for the dollar, however many traders still believe that although Mr Paulson may want a stronger dollar, Washington do not.
GBP
The sterling was on track to chalk up its biggest one-day gain against the dollar. The pound outpaced both the yen and euro, and, with a slew of market data released, it will go a long way to supporting sterling.
USD
The dollar remained under pressure after falling sharply, as suspicions are ever-increasing that Washington wants a weaker dollar to reduce the huge US current account deficit. US President named Henry Paulson as Treasury Secretary. The dollar initially rose, but would remain vulnerable.
EUR
Over the past month, the pace of the euros rise against the dollar could cause problems for the ECB, but analysts say the eurozone economy is strong enough and should stay overvalued until US deficits fall.
JPY
The yen eased against the dollar after slightly weaker than expected Japanese industrial output data. While the output figures were not particularly strong, they supported expectations that the BoJ will end its zero interest rate policy relatively soon.