Daily currency report

The dollar is currently sitting on the precarious position of a 15-year low against a basket of currencies with investors eagerly anticipating the US retail sales release for clues as to whether the housing market troubles are further hurting the economy.

GBP
The sterling plummeted to a 14-month low against the euro due predominantly to high money market rates and a worsening economic outlook. There has certainly been a squeeze across UK money markets epitomised by the plight of Northern Rock and as a result it has ignited the catalyst for speculation that UK interest rates may start falling next year.

USD
The dollar rose against the euro slightly in technical trading, however it still remains near a record low against the euro as investors are currently bracing themselves for an interest rate cut. However as traders await eagerly the release of the US retail sales, it's likely to be quiet before the storm.

EUR
The euro cemented gains this week and reached a 14-month-high against the pound, a one-month high against the yen and an all-time high against the dollar. A commentary from the ECB Governing Council member Yves Mersch helped to propel the currency further as he stated that the bank "may resume tightening" which opened the door for another rate hike before year end.

JPY
The yen continued its slide as the Nikkei rose, which served the purpose of spurring investors to cut short positions in cross yen carry trades. The yen gained some strength after a report that a British mortgage lender, Northern Rock, was to get financial support from the BoE.