Daily currency report

The dollar had a perilous week and before this week had even started it has been hit hard again. Despite a dollar rally after the Federal Reserve's infusion of $400 billion in liquidity the greenback continuously hit fresh lows against the euro while setting 12-year-lows against the yen.

GBP

Despite a busy week of economic releases the pound moved mainly on the health of global financial markets and the ever increasing credit crunch that is gripping the markets.

USD

The big news was once again the deepening credit crisis with Bear Stearns, the US' 5th largest investment bank, facing a Wall Street version of a run on the bank. JPMorgan set a deal to buy it's stricken rival for a rock-bottom price, while the Fed expanded lending to securities firms for the first time since the great depression to prop up the financial system. FOMC members are expected to cut the base lending rate by a further 0.50 per cent, the big question remains though, can the Fed avert a recession or are we already in one?

EUR

The euro continued its recent ascent against the majors continually hitting all time highs against the dollar whilst steadily progressing against the sterling. Despite the euro's strength, members of the Policy Committee and government officials have started to voice their concerns which could possibly lead to a coordinated central bank intervention to halt the euro's dominance.

JPY

As with all the major currencies the yen took most of its direction from widespread dollar weakness, hitting 12-year-lows against the dollar and also appreciating several percent against the sterling.