Daily curency report - May 5, 2010

The general election in the United Kingdom is likely to dominate this week's proceeding overshadowing most economic data releases. The euro remained under threat, where, despite some positive data releases, it was still the ongoing negotiations around the Greek bailout that continue to influence trading patterns for the single currency. The dollar holds onto higher levels against the majority of its competitors as the continued strengthening of the world's biggest economy was further confirmed on Friday as GDP figures showed the US economy grew at a rate of 3.2 per cent in the first three months of the year. The news impacted the yen which fell to an eight month low against the dollar and weakened versus the euro as signs the global economic recovery is gaining momentum reduced demand for Japan's currency.

Sterling

Sterling's encouraging start to last week didn't last as mixed data and continued uncertainty around the election outcome eroded early gains. Ongoing fears of possible sovereign debt default in Europe saw investors place the poor state of UK public finances under the microscope as a growing mood of risk aversion saw the pound lose ground to the dollar.

US Dollar

The dollar holds onto higher levels against the majority of its competitors. The greenback continues to benefit from both positive domestic data as well as safe have inflows encouraged by troubles in Europe.

Euro

Despite encouraging data releases coming out of the eurozone last week it is still the ongoing negotiations around the Greek bailout that continue to dominate the news and dictate trading patterns of the single currency. The euro fell for the first time in four days against the dollar as concern mounted that the €110 billion package, announced last week, could fail to win support from some of the region's governments.

Japanese Yen

The yen fell to an eight month low against the dollar and weakened versus the euro as signs the global economic recovery is gaining momentum reduced demand for Japan's currency. Japan also became embroiled in a week dominated by the matter of sovereign debt ratings with Standard & Poor indicating that a fiscal plan scheduled for next month's Japanese government meeting may be key to whether it will cut the nation's rating.