Daily currency report

The dollar finished the trading session up against most of its major currency trading partners while Sterling rose initially to a two month high against the greenback and firmed against the euro as a well received fundraising from HSBC, the UK's largest bank boosted demand for sterling. Meanwhile, the euro surrendered its previous gains against the dollar, as grim economic data supported the view that the European Central Bank will have to continue loosening its monetary policy.

Sterling

Sterling weakened against the dollar, erasing earlier gains which had propelled it to a two month high against the US currency as equity markets went into the red, dampening investor sentiment. UK equities fell 1.2 per cent, cutting gains earlier in the session to mirror falls on Wall Street which were driven by losses in banking stocks.

US Dollar

The US dollar edged higher against the euro as European and US stocks fell on fading optimism over the global economy, prompting investors to seek shelter in the safety of the greenback. The dollar's correlation with equity markets is likely to grow tighter over the course of the next few weeks as earning reports for Q1 are released.

Euro

The euro surrendered recent gains against the dollar and sterling on the back of poor retail data. More evidence that the European Central Bank may need to loosen their monetary policy further was duly provided from the retail sector. The drop in sales underlines weak consumer demand in Europe, which has been hit by tighter credit conditions and rising unemployment.

Japanese Yen

The yen had fallen to almost a six month low versus the dollar and euro with investors selling the yen in response to a rise in global stocks. However, as stocks tumbled, the yen trimmed its losses.