Pound Sterling - UK Markets

This morning sterling currency rates are slightly weaker against the yen and US dollar, following reports that talk of recovery in the UK is premature. Sterling exchange rates have gained 0.44% against the single currency to trade above 1.17 and the pound is also stronger against the Australian and New Zealand currencies.

A report from the Confederation of British Industry has dampened investor optimism this morning, placing UK economic recovery in the middle of 2010. The CBI expects the UK economy to contract by 3.9% in 2009 before returning to 0.7% growth in 2010. The availability of credit for households and businesses, as well as a weak labour market are expected to contribute to a "gradual" recovery. This week labour market, inflation and retail sales data are published in the UK, and these are likely to impact on currency exchange rates.

US Dollar - US Markets

Currency rates for the US dollar are broadly stronger this morning against its international currency partners. The dollar is currently trading at 0.72 versus the euro and 0.61 against the pound, while gaining over 1% against the Australian, New Zealand and Canadian dollars.

Consumer confidence levels in the US rose to a 9-month high in June, driving demand for the US currency. Economists are suggesting that the US and UK are at a comparable point in the economic cycle at present. While the financial sector appears to be stabilizing, rising oil prices and inflation must be kept in check so as not to hinder economic recovery. The producer and consumer price index are out in the US early this week and these figures are likely to have a bearing on international currency exchange rates.

Euro - European Markets

Euro currency rates have declined this morning, with the single currency losing nearly 1% against the US dollar and 0.66% against the pound. The euro has gained against the Australian, Canadian and New Zealand currencies but remains subject to rising risk trading in the market. 

The G8 meeting over the weekend held little surprises in store in terms of currency exchange rates, with the euro weakening slightly on the back of profit taking from investors. This morning Switzerland's producer and import prices have declined 5% for the month of May. European payrolls also contracted by record levels as the recession forced cutbacks in the first quarter. Industrial production figures for Switzerland and the German ZEW survey are released tomorrow.

Other Currencies - Highlights

New Zealand retail sales figures rose in April more than expected, largely driven the by the sale of new autos. The Kiwi dollar continued to rise following the RBNZ decision to leave interest rates on hold and is gaining at the fastest pace since 1985 on the back of improved global confidence.

However a stronger Kiwi dollar is a threat to New Zealand's trade based economy which will rely on improved export levels to climb out of recession. This week, New Zealand's currency exchange rates are likely to be affected by international markets, including the interest rate decision in Japan tomorrow.