Markets will be looking at the release of the US trade balance and the UK's consumer price index for August. UK CPI is anticipated to remain unchanged as US trade deficit is expected to widen.

GBP
The sterling hit a six-week low versus the dollar and a three-week low against the euro. UK CPI is anticipated to remain unchanged but a rise in this figure should see the pound strengthen and put further pressure on the dollar.

USD
With the US trade deficit generally expected to widen, as high oil prices boosted import costs, the dollar could lose some ground against the major currencies. The dollar has been close to a two-month high against the yen after weak capital spending data has raised more doubts about another BoJ rate increase this year.

EUR
The euro gained following comments from ECB member, Juergen Stark. The euro is benefiting from a weaker tone to the yen. It may strengthen further on speculation the fastest economic expansion in the euro region will prompt the ECB to keep raising interest rates.

JPY
With the drop in machinery orders on top of the weak industrial output data and surprise slowdown in the CPI, the Bank of Japan rate increase expectations are rapidly disappearing.

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