Daily currency report

The dollar edged up against the yen after data showed improvement in US consumer confidence, while worries about Germany's economy and banks knocked the euro off last weeks four-and-half-month high. The Australian and Canadian dollar both rose against the US dollar as oil prices reversed losses and US and European shares closed higher.

Sterling

Sterling recovered from an earlier slide against the dollar after a strong improvement in US consumer confidence beat market expectations, prompting demand for riskier assets. Currency movements were aggravated in thin liquidity as traders in London and New York returned from a Bank Holiday.

US Dollar

Growing appetite for risk saw the US dollar heavily sold off as data showed that confidence among American consumers jumped in May by the most in six years. The data overshadowed disappointing house price data and fuelled speculation the economy will recover later this year. The news was enough to prompt a stock market rally for the first time in 5 days as investors continue to back the notion that the worst of the recession may now be over.

Euro

The single currency lost ground against both the US dollar and sterling as data showed that European industrial orders declined for an eighth month in March as the worst recession in more than six decades curtailed global demand for machines and equipment.

Japanese Yen

The yen fell as an improvement in US consumer confidence reinvigorated investor interest in betting on riskier assets, including currencies seen likely to benefit quickest from economic improvement.