Daily currency report

Volatile trading in equity markets was mirrored across the currency exchanges, with no particular currency emerging as the winner. The sterling was able to claw back some of its losses against the US dollar, although analysts have attributed this more to stock market gains and profit taking rather than any underlying support for the pound. Elsewhere, the Reserve Bank of New Zealand is expected to announce an interest rate cut.

Sterling (GBP)

The sterling recovered from a disappointing opening to end the day higher against both the US dollar and the euro. The pound had been sold off heavily earlier in the week as investors began to price in another hefty interest rate cut this week. However, talks of a proposed merger between British Airways and Quantas airlines sparked a mini recovery in stock prices and also prompted investors to take profits on the previous session's movements.

US Dollar (USD)

The dollar lost ground against both the sterling and the euro and is also now trading close to a five-week low versus the yen as equity markets and commodity prices recovered slightly and traders took profit on Monday's moves. US car giants, General Motors, Chrysler and Ford, returned to Congress, cap in hand, to ask the government $34 billion in loans to save the American auto industry.

Euro (EUR)

The euro remains well-supported across the board in spite of persistent data that shows a rapidly deteriorating outlook in the eurozone. Market consensus appears to be for a 75-basis point cut at this week's European Central Bank policy meeting.

Japanese Yen (JPY)

The yen is holding steady across the board in spite of the advances made by the Asian stock markets. With volatility still dominating daily trading, investors have proved reluctant to return to the carry trade in which they borrowed the yen to invest in higher yielding currencies.