The euro strengthened against the majors as investors put their bets on riskier assets and moved away from the perceived safe-haven US dollar on views the global economy is on the road to recovery while the pound weakened by negative unemployment data. A plethora of strong data was released in the US which sparked investors to let go of dollar dominated assets and jump into higher yielding currencies.

Sterling

The pound plunged to a four-month low versus the euro for a second consecutive day as official figures showed UK unemployment rose to its highest level since 1995, denting optimism that an economic recovery is taking root. Unemployment increased by 210,000 to 2.47 million in the three months to July, taking the jobless rate to 7.9 per cent and claims for unemployment benefit in August grew by 24,400 from July to 1.61 million.

US Dollar

The dollar dropped to a one-year low against a basket of currencies as appetite for risk returned and a report showing substantially higher net capital outflows from the US in July rattled investors. Higher yielding currencies benefitted from ongoing negative sentiment on the long-term health of the US currency and its safe-haven appeal has diminished on the view that the global economy is improving.

Euro

The euro was the biggest winner as traders' appetite for risk returned on views that the global economy is on the road to recovery. Consumer prices in the eurozone increased 0.3 per cent in August, with the annual rate of inflation falling 0.2 per cent from the previous year to mark the third straight monthly decline. The figures were in line with expectations.

Japanese Yen

The yen strengthened across the board after Bank of Japan Governor Masaaki Shirakawa and Japan's new Finance Minister Hirohisa Fujii agreed that a rise in the Japanese currency may support the nation's economy in the long run.