Daily Currency Report

The dollar rallied broadly, hitting two-month highs against the yen. The sterling tumbled against the dollar to a two-week low, and also against the euro to a three-week low. The Romanian leu extended its gains against the euro and hit four-year highs, following the country's European Union entry. Finally oil prices dropped sinking below key levels.

GBP
The sterling was the biggest market mover, slumping to an 11-month low against the dollar by 1.17 per cent, even though the construction sector PMI is rising and the UK housing market showed continuous strength.

USD
The dollar extended gains after the Institute for Supply Management's reading on the factory sector beat expectations for December. These numbers sparked a dollar rally.

EUR
The euro hit a record high against the yen as investors displayed continued appetite for yield. Hopes of another rate rise from the ECB were raised as data revealed a much larger fall in German unemployment than expected.

JPY
The low-yielding yen came under pressure, falling to an eight-year trough against the pound and to a nine-year low against the Australian dollar. Such falls in the yen occurred despite the possibility the Bank of Japan could raise interest rates as early as mid-January.