The dollar fell sharply due to a combination of a data relating to retail, account deficit and interest rates. The euro also suffered after a survey showing that German investor sentiment weakened unexpectedly. The sterling strengthened its loss after the release of weak labour market data.

GBP
The pound rose sharply against the dollar and pulled back some ground from the euro, benefiting from weaker than expected data released in the US and Europe. However UK labour market data released had a less than expected impact and a much larger than expected increase in unemployment claims.

USD
The dollar came under heavy selling pressure due to the structural weakness of the US economy. The current account deficit is unsustainable and cannot be solved by exports alone. It could require dollar depreciation and weaker domestic demand for imports. The Fed is unlikely to raise rates beyond 4.75 per cent, sending the dollar down further.

EUR
The euro fell 0.3 per cent against the sterling and 0.7 per cent against the yen as Germany's ZEW Index fell to 63.4. The fall was blamed on the increase in interest rates.

JPY
USD/JPY was hit by a more pronounced correction as the dollar fell across the board. The yen firmed up against most other currencies.

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