Daily currency report

The euro rose to a 10-day high against the dollar and the yen is looking for its biggest daily gain since early 2002, spurred by the prospect of the collapse of US investment bank Lehman Brothers as the bank filed for bankruptcy. It has led to traders dropping their previous assumption that the Federal Reserve's next move would be an interest rate hike and thus the euro is beginning to look heavily oversold.

Sterling (GBP)

The principal reason behind the pound's rise versus the dollar is obviously the collapse of Lehman Brothers investment bank which has prompted traders to dump the greenback as uncertainty grips financial markets. Nevertheless, support for the pound remains relatively thin on the ground, and the sterling is weaker against the euro as fears still linger that the UK economy is headed for a recession.

US Dollar (USD)

The US dollar fell amid uncertainty over the future of investment bank Lehman Brothers and, furthermore, data highlighted a second consecutive month of declines in retail sales. The bank has incurred billions of dollars in losses in the mortgage market and the last potential buyers pulled out of the acquisition over the weekend. Elsewhere, the Bank of America agreed a deal to buy Merrill Lynch for a reported sum of 50 billion dollars, a deal which will create the world's largest financial services company.

Euro (EUR)

European Central Bank president Jean-Claude Trichet fired another salvo on inflation and wage indexation. The inference is that Mr Trichet is trying to over-emphasise the tough anti-inflation rhetoric and induce a euro recovery against the dollar.

Japanese Yen (JPY)

The yen fell against all the majors except the dollar on Friday.