The euro prospered, benefiting from both negative economic data from the US and a return of risk appetite. In a show of unity, leaders from the European Union held an emergency summit in Brussels to discuss future regulatory reform and fiscal consolidation plans. Sterling also benefited, reaching one month highs against the US dollar following news from the Office for Budget Responsibility showing government borrowing declining, with this news being further reinforced by Public Sector Borrowing figures coming in lower than expected. Elsewhere, the US dollar continued to weaken, following an announcement by the Chinese government that they would loosen the yuan's peg against the US dollar.

Sterling

Data showed that UK borrowing came in below expectations, wholly positive news for the new coalition government preparing for the budget this week. Sterling reached a one-month high against the US dollar following the news, before being pegged back as this improved risk tolerance fizzled out.

US dollar

The USD hit one month lows against sterling and three-week lows against the euro. Investors were forced to digest more weak economic data, with the decline in retail sales was to be only a beginning of a string of weak data.

Euro

The euro stayed near three-week high's against the USD and held steady against sterling, as data released in Germany showed Prices year on year rose by 0.9 per cent, above the expected 0.7 per cent. There were a number of events that prompted a surge in the euro, starting with a show of solidarity from the leaders of the 16-bloc nations.

Japanese yen

The yen trade firm against a generally softer dollar and it lost ground against its riskier peers in Europe and Australia on receding fears of a slowing global economy.