The dollar slumped to new lows versus the euro, after a run of woeful US data. This helped to cement the view taken by most traders that the Fed will continue to cut rates over next few months. Elsewhere, the sterling was still hobbling after a recent slew of poor data, driving the pound to fresh record lows against the euro, however gaining against the dollar.

GBP
The sterling recovered from the record low versus the euro and made progress versus a weak dollar. With the possibility that the Bank of England is set to cut rates, even if at a more moderate pace than the US, and with ongoing worries about the health of Britain's financial sector, analysts claimed the sterling was unlikely to benefit from dollar weakness for long.

USD
After a much larger than expected rise in weekly US jobless, claims boosted expectations of growth-stimulation interest rate cuts from the Federal Reserve, with markets now pricing in as much as a 32 per cent chance of a 75 basis point easing in March. With the Fed rate cuts set to continue and the European Central Bank's attention focused on inflation, most analysts expected the dollar's decline to be prolonged.

EUR
The euro continued to reach new highs against the dollar and strengthened across the board against most of the major trading currencies. Recent data showed eurozone growth is slowing sharply and gross domestic product will rise just 0.30 per cent in the first quarter.

JPY
Japanese inflation in January matched a decade-high 0.8 per cent from a year earlier, illustrating the problem the Bank of Japan faces as it juggles rising prices with a faltering economy.