The US dollar is again under pressure after talks in Washington failed to find agreement on a massive $700 billion government proposal to bail out the troubled US finance sector. At the heart of the disagreement is a rival Republican package which would offer insurance to companies that hold bad assets instead of the government buying them.

Sterling (GBP)

Trading in the pound was determined by the events unraveling in the US. Consequently, sterling remains on previous levels, floating around as events in the US continue to unfold.

US Dollar (USD)

The dollar recovered somewhat as it appeared that Washington was nearing an agreement over a proposed rescue plan for its floundering financial sector. Whilst this plan now appears to be crumbling, the initial surge of positive sentiment was enough to distract traders from another slew of terrible data from the US economy. Sales of new homes plummeted to their lowest level in more than 17 years, while prices hit four-year lows. Durable goods orders were also down 4.5 per cent on the month.

Euro (EUR)

The euro showed little reaction to data suggesting a mild improvement in German consumer sentiment. The report for October jumped up to 1.8 from September's 1.6, confounding expectations for a decline to 1.3. However, the relatively good consumer morale news has been somewhat mitigated by the fact that the data was collected before much of the latest round of bad news hit the streets.

Japanese Yen (JPY)

Japanese inflation jumped last month, marking a sudden shift away from years of damaging deflation. Consumer Price Index in Japan jumped to 2.4 per cent year on year. However, the Bank of Japan will not be able to adopt the traditional tactic of increasing rates to address the problem.