Daily currency report

The positive sentiment that has been spreading across financial markets continued on the view that the global recession might finally be bottoming out. This boosted stock and oil prices to the detriment of safe haven currencies such as the US dollar and the Japanese yen. Oil prices have risen to the highest level in six months in reaction to the rise in global equity markets as well as the returned correlation between such price rises and a weakening greenback. Sterling hit highs against the US dollar not seen since January 8 in reaction to better than expected trade data and the greenback's continuing weakness as renewed risk appetite supported the pound.

Sterling

The plethora of positive data released saw sterling reach four month highs against the US dollar after data released bolstered hopes that the pace of decline within the UK economy might be slowing.

US Dollar

The dollar index, an index used to measure currency strength against majors such as the euro, yen and pound among others, fell as low as 82; the weakest level since January 9. While the US dollar fell to four month lows against sterling, the dollar also slid to its lowest level against the euro for the first time since March 23. The renewed risk appetite which has entered the market is certainly to the detriment of this primary safe haven currency.

Euro

With little data of prominent importance released this week and European shares remaining largely flat, the continued strength of the euro can only be explained by the wealth of positive sentiment within the eurozone itself.

Japanese Yen

The yen saw small gains after current account figures came in better than expected, sending the US dollar to its lowest level since late April against the Japanese currency.