Daily currency report

The euro relinquished the gains that it made against all major currencies while the US dollar continued to strengthen on the back of the better than expected jobless claims figures released late last week. Elsewhere, sterling fell against the dollar to two-week lows after a collapse of support for the UK's Labour party in the European elections which increased the chances of further challenges to Prime Minister Gordon Brown's leadership.

Sterling

The pound fell against the dollar to near a two-week low as more poor election results added to questions about the future of Gordon Brown as Prime Minister as well as Labour's position as ruling party. Sterling has reversed gains against the dollar following a dramatic rally in the past month or so as higher risk currencies, including the pound, have been supported by early signs that the market is recovering.

US Dollar

The US dollar remained buoyant ahead of Ireland's downgrade as investors focused on improving prospects for the US economy, reversing a trend where the dollar has been sold for higher risk currencies. The dollar benefitted from a sell off of euro reserves as Standard and Poor reduced Ireland's sovereign debt rating for the second time this year.

Euro

The euro retreated across the board as Standard and Poor cut Ireland's long-term sovereign credit ratings to AA with a negative outlook; it was previously AA+. The country lost its prized top-notch triple-A rating in March. This was the second such cut this year and, as a result, it pushed the euro to a near two-week low against a basket of currencies. A shift to risk aversion has dragged the euro lower against the US dollar and Japanese yen, both traditional safe haven currencies.

Japanese Yen

The yen advanced for a second day against the euro and strengthened versus the dollar as declines in Asian stocks increased demand for the relative safety of Japan's currency.