Daily currency report

With an uneventful day on the FX markets, focus shifted towards Japan's fourth quarter GDP results, which showed a decline in exports of 3.3 per cent in Q4, making three straight quarters of contraction - the worst result since the first oil crisis in 1974. In other news, President Barack Obama will sign the $787 billion economic stimulus package which it is hoped will save or create 3.5 million jobs.

Sterling

The sterling gave up most of its gains from last week, as the continued banking crisis which has gripped the UK since the fall of Northern Rock 18 months ago, gathered pace with many analysts believing that the government would have to use more of taxpayers' money to bail out Lloyds Bank.

US Dollar

Markets were closed in the US for the President's Day holiday, but this did not stop the dollar from strengthening as investors poured back into the dollar as a safe haven currency. The moves came after shocking GDP figures in Japan as well as continued problems in both the UK and eurozone which did little to calm investors' nerves.

Euro

The euro fell to two-month lows against the dollar and the yen, as concerns to the eurozone's exposure to Eastern Europe and the knock-on effect on European banks weighed heavily against the currency. This sentiment was echoed by credit rating agency Moody's, that predicted the eurozone is headed for a very deep recession and stated that the combination of higher provisions for bad debt, the rise in bank borrowing costs and falling currencies would weigh on European banks profitability and erode their capital growth.

Japanese Yen

Confidence among Japanese manufacturers remains firmly rooted near record lows and service-sector sentiment sank to an all-time low, as the economy slides deeper into recession amid global economic strife.