The euro was yet again the currency of choice for investors, rising to a new record high against sterling, but also achieving a six week high against the US dollar. The sterling held steady against the US dollar in spite of the ground lost versus the euro.

Sterling

The sterling hit a record low against the single currency however, it fared slightly better against the US dollar, although analysts have attributed sterling's rise to underlying weakness in the greenback rather than any indication of support for the pound. In separate news, David Blanchflower, the first Bank of England official to predict the recession, announced that he would step down from the Bank's Monetary Policy Committee in May after winning a year-long campaign to take an axe to interest rates.

US Dollar

The dollar slipped to a six-week low against the euro and also slid versus the yen as a tentative agreement by the US lawmakers to rescue American automakers helped calm investor sentiment. Investors have become more confident that the government bailouts, such as the proposed loan to America's top automakers, should eventually help to improve the economic conditions globally.

Euro

Data revealed a steep drop in industrial output during October, news that served to fuel expectation that Gross Domestic Product has yet further to fall. Nevertheless, European Central Bank officials remain relatively bullish over prospects for the eurozone in the year ahead. According to the governor of the Austrian Central Bank, Ewald Nowotny, the recession in the eurozone should bottom out in Q1 of next year.

Japanese Yen

The Japanese yen edged down against the dollar and euro as Japanese shares extended gains. Market players said that demand from Japanese importers helped to support the dollar against the yen. Relative calm in the currency markets in the past few days was indirectly supporting the euro.