Daily currency report

The dollar gained against both the euro and the pound as it emerged that UBS and Deutsche Bank announced larger than expected write-downs. The upshot of this has emphasised the fact that the credit market problems are global and that the European economies also remain vulnerable to the financial crisis. Furthermore, the dollar was aided by the news that Lehmann Brothers Holdings Inc was raising funds, bolstering investor confidence.

GBP
The recurrent theme of the housing gloom has continued with the revelation that First Direct closed their doors to new mortgage customers. There has been an unprecedented level of business after recent moves by rival banks to pull similar mortgage deals because of the high costs of funding, due to the credit crunch.

USD
The dollar was assisted by the news that the Lehmann Brothers Holdings Inc sold $4 billion of convertible preferred securities, staving off questions about the fourth-largest bank's stability. The dollar is certainly sensitive to news of large US financial firms, especially after the near-collapse of Bear Stearns.

EUR
Germany's unemployment rate has fallen by more than expected in March, meaning the number of people out of work was 110,000 lower than in February. Analysts have stated that they expect demand for labour to continue to grow. However, this was offset against separate data highlighting that German retail sales fell 1.6 per cent in February from the month before, the largest fall for nine months.

JPY
Business sentiment among big Japanese manufacturers fell to a four-year low, a Bank of Japan survey revealed. This has raised qualms of a worsening economic outlook and cemented market expectations that the central bank may cut interest rates later in the year.