The dollar lost its footing and headed back to multi-month lows against commodity related currencies such as the euro and sterling, as investor appetite for higher-yielding assets continued to recover. Meanwhile, oil prices hit a fresh six-month high, at $66.31pb buoyed by falling US stockpiles, amid signs the US economy is not shrinking as fast as people thought. Sterling notched a rise of 8.8 per cent against the dollar over the month, its strongest performance since March 1985, while the euro's gains accelerated in the past month rising 7 per cent, the most since December, as investors sold US Treasuries in favour of higher-yielding assets amid signs of economic recovery.

Sterling

Sterling begins the session, and week, with an optimistic outlook as house prices rose 1.2 per cent in May from April, offering evidence of positive activity in the UK housing market, according to figures from the Nationwide building society.

US Dollar

The US dollar fell to five-month lows against a basket of currencies as an advance in global equities and signs of an easing global recession drove investors to snap up high-yielding currencies and riskier assets.

Euro

The euro continues to firm across the board helping it to its steepest three-month rally against the US dollar in seven years and sapping the earnings of exporters in the 16-country region and delaying its recovery. Leading to Deutsche Bank AG, UBS AG and Barclays Capital, the largest currency traders, are urging clients to sell the euro, which strengthened 11.8 per cent from February.

Japanese Yen

The yen continued to suffer as investors abandoned the currency in search of higher returns elsewhere. Analysts claimed the yen's underperformance reflected the upward momentum in long-term yields outside of Japan.