Daily currency report
The dollar hit further lows against the pound while discussions around a solution to the ongoing debt problems in Greece helped the euro come off recent lows.
Sterling had a mixed reaction from the markets. Manufacturing rose by 0.9 per cent from and industrial production also rose by 0.5 per cent on the month. Year on year manufacturing was down 1.9 per cent and industrial production was 3.6 per cent lower. These upbeat figures were not enough to sustain support for Sterling following comments that more money may need to be pumped into Britain's fragile economy.
The dollar reacted positively to Federal Reserve chief, Ben Bernanke's testimony in which he outlined the exit strategy for its ultra loose monetary policy saying that the discount rate could soon rise. He said that the Fed would likely increase the interest on excess reserves held with the Central Bank as a way of providing incentives to institutions to keep more funds at the Federal Reserve.
The euro hit a four-week high as the focus once again remained on the situation in Greece and the 'on again, off again' comments on an EU rescue deal. Apparently France and Germany will present a plan to bailout Greece. However the plan is certain to contain some tough measures, such as these funds will be provided only if heavier cuts are made.
Japan's core machinery orders rose to 20.1 per cent in December. This was the biggest quarterly rise in two years but was overshadowed by a fall in wholesale prices. Yen positions were unwound as risk appetite returned to the market on the news that the European Union would create a rescue plan for Greece and this saw the currency lose some ground.