Sterling opened the session up on the euro but has given up some of the gains that had been made against a strengthening dollar. The dollar rose versus the euro with the latter suffering a decline which has also seen it weighed down against a basket of other currencies. The yen also weakened after President Obama said the US "may be seeing the beginning of the end of the recession", reviving optimism the global slump will slow.

Sterling

Sterling opened up on the euro but has given up some of the gains that had been made against a strengthening dollar.

US dollar

The US dollar continued to recover as global equities and risk assets broke from the recently seen rallies. The greenback was lifted by a bout of profit taking prompted by a series of events and data. The dollar rose versus the euro for a second day as China's stocks plunged the most in eight months and a report showed orders for US durable goods fell last month, boosting demand for the greenback as a safe haven.

Euro

The euro dropped back to two week lows against the dollar, a decline which has also seen it weighed down against a basket of other currencies. The European Central Bank has been predicting negative rates of inflation for some time but the prospect of falling prices may also fuel fears of deflation.

Japanese yen

The yen declined against the majority of major currencies as a government report showed Japanese factory output rising for the fourth straight month in June, up 2.4 per cent from May, as their manufacturing sector continued to recover.

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