Trading in the UK was subdued as many investors were wary of taking on big positions ahead of the general election. The ongoing Greece debt crisis is still dominating the headlines and is likely to keep the euro under pressure amid fear of contagion to other European countries despite the best efforts of the International Monetary Fund and the EU to restore confidence with investors. The dollar attempted to add to recent gains on the back of more upbeat data releases. Both US pending home sales and US factory orders were positive and exceeded market expectations once again and this is helping to underpin the green back.

Sterling

Sterling extended losses against a stronger dollar to hit a near five-week low as investors shed riskier assets on continuing debt concerns in the eurozone. Although the pound lost ground against the US dollar, it was a completely different story versus the euro as the under fire currency continued to lose ground across the board.

US dollar

Strong US factory orders and pending home sales boosted the dollar across the board. Although some of the recent strengthening of the dollar against major crosses is linked to euro weakness and the subsequent risk aversion which has led to a flight away from riskier assets, the surge can also be attributed to the improvements in US fundamentals.

Euro

The Greek debt crisis keeps dominating the news and despite the European Union and IMF having agreed the biggest bailout of a country ever with €110 billion emergency loans, currency markets showed little enthusiasm for the deal. As a result, the euro tumbled to a one-year low against the dollar on fears that the emergency aid for Greece may not prevent the debt crisis from spreading across to other eurozone countries.

Japanese yen

The Japanese yen has also strengthened on the back of contagion fears in the eurozone which has sparked a wave of risk aversion. It is Golden Week in Japan so there have been no major developments as markets are shut to celebrate the holiday.