Daily currency report

The US dollar rally continued as the decline in oil prices helped to ease pressure on the world's largest economy. The greenback traded at its highest levels against the euro and the pound for seven weeks, and at an eight-month high against the Japanese yen. Elsewhere, the market's attention is on the interest rates announcements by both the Bank of England and the European Central Bank with both banks expected to keep rates on hold.

Sterling (GBP)

The sterling came under sustained pressure against the dollar as the IMF downgraded its growth forecasts and the dollar strengthened as a result of falling oil prices. Attention now will turn to the Bank of England's monetary policy committee who are set to deliver an interest rate announcement. With a cooling economy and a high inflation, most traders believe rates will be held at five per cent.

US Dollar (USD)

The dollar rally continued mostly as a result of falling oil prices and resulting benefits that will bring to the world's largest economy.

Euro (EUR)

A steep drop in German industrial orders in June was the latest in a long list of dismal eurozone economic reports that highlight a rapidly slowing economy. Mounting signs of a slowing economy will probably hamper the euro's progress on the exchanges even if European Central Bank chief, Jean-Claude Trichet, remains true to his hawkish anti-inflation stance.

Japanese Yen (JPY)

Japan's core machinery orders fell much less than expected in June, however, manufacturers warned that orders could yet decline in Q3, eventually pushing the world's second largest economy into recession. On the exchanges the yen slumped to an eight-month low against the dollar, as traders rebuilt their carry trade positions.