Daily currency report

The US dollar rose against both the pound and the euro, rebounding from a two-and-a-half week low against the single currency as equities rallied and an economic forecasting gauge showed the US economy although weak, has so far managed to avoid recession.

Sterling (GBP)

The sterling fell against both the dollar and the euro shrugging off surprising housing market data, with sentiment staying bearish due to a recent run of poor data and expectations for the UK economy to slow further.

US Dollar (USD)

The dollar steadied after rebounding against the euro on improved sentiment after a positive US leading indicator report. However, the greenback's upside was capped because of caution ahead of the data to be released in eurozone. The leading economic indicators index rose by 0.1 per cent in April. This data was seen supporting views that the US economic slump had bottomed out and that the Federal Reserve was near the end of its easing cycle.

Euro (EUR)

Jean-Claude Trichet, the head of the European Central Bank, said that the credit crunch is ongoing and it is not evident that the worst is over. He warned that if central banks were tempted to cut interest rates now, more serious problems could follow. The ECB has kept interest rates on hold at four per cent as a result of continuing inflationary pressures, even amid an economic slowdown.

Japanese Yen (JPY)

The Bank of Japan left its interest rates on hold at 0.5 per cent as widely as expected, in a unanimous vote. The Bank has now kept the monetary policy unchanged since raising the target rate from 0.25 per cent in February last year.