Daily currency report

Overview

Last week was all about the US dollar's decline, as it reached a 20-month low against the euro and a 14-year low versus the pound. Whether the euro and pound can continue their rises might depend on the results of interest rate announcements in the eurozone and UK this week.

GBP
The pound hit a 14-year high versus the dollar. The pound was given a boost following the prospect of a narrowing interest rate gap with the US as well as UK inflation still being above the two per cent target.

USD
The dollar suffered one of its worst ever weeks against the pound and the euro. Adding to the dollar's rut was the release of the US ISM report which showed that manufacturing had unexpectedly dropped to its lowest level since April 2003.

EUR
The euro moved up to a 20-month high versus the dollar and reached its highest level ever against the yen, boosted by expectations that the ECB will hike interest rates on Thursday by 25bp.

JPY
The yen has been on the back foot recently, as it reached the lowest ever level against the euro and is extremely weak versus the pound. Even the news that the BoJ are likely to increase the Japanese interest rate by 25bp couldn't help the flagging yen.

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