Daily currency report

The US dollar was sold off heavily and it is mired at an all-time low versus the euro. Traders and investors dumped the greenback following a slew of data that showed input prices rising and consumer confidence plummeting; cementing the pervasive sense of gloom surrounding the world's largest economy. Later on Fed vice chairman Donald Kohn all but confirmed further interest rate cuts are in the pipeline as he stated that the Fed will focus more on downside risks to growth rather than inflation.

GBP

The sterling rose to its highest level in over a month versus the dollar and held steady against the euro, benefiting from broad based-dollar weakness and also the growing feeling that any future Bank of England rate cuts will be gradual rather than aggressive.

USD

The dollar slumped across the board after surprisingly weak US data and comments from the Federal Reserve's vice chairman reinforced the view that interest rates are set to tumble again as the US economy faces up to the very real threat of a recession.

EUR

There was good news from the eurozone as German corporate sentiment unexpectedly rose in February due to a sharp rebound in the retail sector. Furthermore, the IFO index has also eased pressure on the European Central Bank, which has come under repeated fire for failing to cut interest rates. Traders also reacted positively to the news, bidding the euro up to a new all-time high against the US dollar.

JPY

The yen again came under pressure as the decline of the US dollar encouraged investors to rebuild their carry trade positions. However, investors are likely to be somewhat more cautious ahead of Ben Bernanke's key testimony before the House committee.