The euro/dollar range was broadened slightly as the US dollar hit a fresh six-month high against the euro, which subsequently lifted the dollar in its crosses. The sterling continued to suffer on weak economic data and thin markets, reaching a 12-year trade weighed low.

Sterling (GBP)

Alastair Darling's comment that the UK economy is facing its toughest time in 60 years has not helped the GBP as the sterling is at a new low versus the euro. In addition last week, rapid dollar gains against the sterling pushed the currency down against the euro.

US Dollar (USD)

The US dollar reached a fresh six-month high against the euro, however, the dollar's gains continue to be by default, as growth data in the UK and eurozone continue to paint a bleak economic outlook. Headline economic data was positive, but digging deeper into the data saw cracks in many components.

Euro (EUR)

The European Central Bank is widely expected to leave the interest rate on hold this week. Still, traders will want to see how deeply the MPC feels that weaker growth will pull down inflation numbers opening the way for rate cuts. If the hawks get their way there will be little mention of the theory and the euro could find some support. On the other hand, traders could opt to see policy as too restrictive, which would be negative for the euro.

Japanese Yen (JPY)

The dollar/yen dipped as oil edges higher as hurricane Gustav takes aim at US oil fields and refineries. This cross was also hit by speculative selling amid thin market conditions in Asia. However, it appears that traders are continuing to trade the yen as an instrument of risk aversion.