Daily currency report

Equity markets across Europe are trading higher after a rally on Wall Street spread to Asia. The US dollar's safe haven appeal has dwindled and the dollar is coming under heavy selling pressure against the euro, which is allowing for the dollar losses in other crosses. The Federal Reserve cut US interest rates by a half-percentage point to one per cent to stave off a severe recession.

Sterling (GBP)

The sterling shot up, rising more than two per cent versus the dollar, with investors easing back on extreme risk aversion as stock markets fired up. The sterling is back up against the dollar and euro for different reasons. Firstly, the dollar is under pressure as markets rally and risk is put back into portfolios and the Fed's rate cut decision has also placed added pressure onto the greenback. The euro has recently weakened by talks of an interest rate cut at next week's meeting and the EU is looking at increasing its credit funding facility to €20 billion.

US Dollar (USD)

Wall Street was united in believing the Fed would lower rates, although views were split on the likely size of the move. The Fed has fought the credit crisis with a series of measures aimed at pumping liquid funds into markets that had become largely frozen and risk averse.

Euro (EUR)

The euro has bounced off its two-and-ok-half-year lows against the US dollar and also jumped against the yen as recovery in emerging assets helped ease fears about global financial woes. This has prompted investors to buy back the recently battered European single currency.

Japanese Yen (JPY)

The yen fell broadly as a rally in Tokyo share prices and growing expectations the Bank of Japan could cut interest rates this week fuelled profit taking on the Japanese currency's surge this month.