Markets' focus is on the Fed's meeting to decide on interest rates, widely expected to have a cut by 0.25 per cent in an attempt to limit the impact of a housing market slowdown. Investors are slightly uneasy over the economy's outlook, as high energy prices and rising food prices are seen as possibly pushing up inflation to above four per cent.

GBP
The sterling rose to a 26-year high against the dollar after MPC member Kate Barker said that a rate cut was not necessarily the right move given that economic conditions in the UK had not changed much since August's Inflation report. While the pound is way off the low reached against the dollar in 1980, analysts believe this could be reached if economic conditions in the UK and the US continue to diverge.

USD
The dollar sank to a fresh record low against the euro and a 26-year low against the pound. Although a 0.25 per cent interest rate cut is expected, some press reports suggested that inflation is of such a concern that the rates will stay as they are; if this happens then it could trigger a dollar positive move.

EUR
The euro hit a new all-time high against a week dollar. An ECB member said that they will do what is necessary and required to ensure price stability for the medium-term but interest rate policy was the wrong tool to use to secure liquidity.

JPY
There was little reaction to the BoJ's expected decision to keep interest rates unchanged at 0.5 per cent. The BoJ downgraded its growth and inflation forecasts for 2007-2008 and highlighted uncertainties about global economic and financial market conditions as potentially affecting Japan's economy.

Commercial Foreign Exchange Travelex Malta, free phone: 800 733 22, www.travelex.com/mt/