Equity markets fell as concerns about the fiscal health of eurozone countries such as Ireland continued to rattle investors. Gold prices also pushed to record highs. However, investors continued to demand riskier currencies with the euro moving to new record five-month highs against the weaker US dollar.

Sterling

More disappointing UK data kept sterling vulnerable despite remaining close to seven-week highs on US dollar selling. Tough credit conditions continue to weigh on UK demand and growth potential. This contributed to sterling’s fall to fresh four-month lows against the in-demand euro. UK mortgage approvals for August fell to February 2010 lows and consumer credit for the same month fell into negative territory. This means either banks are not lending or consumers are reluctant to borrow.

US dollar

The dollar continued to lose ground against its major rivals. Decelerating US economic growth and expectations of further monetary stimulus needed to avoid a possible double-dip US recession are considered to be the main culprits.

Euro

The euro is managing to stay out of the spotlight in currency markets despite sovereign debt concerns. In fact, the single currency reached fresh five-month highs against the US dollar as markets continue to sell the greenback, fearing more US quantitative easing. The single currency also advanced to new four-month highs against sterling as weak UK data weighs on Britain’s economic outlook.

Japanese yen

A weak Tankan survey was followed by manufacturing PMI which showed sentiment improving by the least amount since early 2009. August industrial output fell by 0.3 per cent, considerably below the expected 1.1 per cent growth. Retail sales remained steady as expected at 4.3 per cent in August.

Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/