It was a volatile week in the markets last week as several major CBs undertook a coordinated intervention to ease the credit crisis, announcing a $60 billion cash injection into the financial system.

GBP

The pound fell to its weakest level against the dollar in two-and-a-half months as risk aversion and poor data continue to weigh heavily. Investors will focus on UK inflation data expected to edge up to 2.2 per cent in November and the publication of the BoE's meeting minutes earlier this month, to give a clue on the outlook for monetary policy.

USD

The dollar rallied last week climbing 1.3 per cent against both the euro and the yen, its highest level in more than a month. The Fed cut interest rates to 4.25 per cent with many expecting further cuts in 2008. However, the dollar rallied as a result of inflationary pressures which limit the ability of the Fed to continue cutting interest rates to stave off a recession.

EUR

The euro fell against the yen and the pound last week as concerns mounted about the effect of recent liquidity problems in the eurozone. The ECB continues to remain hawkish on inflation as the final November CPI figure was revised to 3.1 per cent, surprising to the upside of market expectations and the highest since May 2001.

JPY

The current volatility in the markets was reflected in the yen last week, which endured wild swings as it tracked investor appetite for risk. The BoJ Tankan Survey little supported the yen showing that Japanese business sentiment had slipped to a two-year low, which saw expectations of a near term rise in interest rates receding.