Pound Sterling - UK Markets

With figures showing that the UK economy sank deeper into recession last year than economists had forecast, the pound has fallen against the euro, headed for a fourth weekly decline. Sterling is also poised for a weekly drop versus the US dollar.

US Dollar - US Markets

With data showing that the US economy, the world's biggest, shrank at its fastest pace since 1982 in the fourth quarter, the dollar has extended its downward trend against most major currencies.

Although the headline figure of a 6.3 percent contraction was slightly better than the consensus forecast of a 6.6 percent decline, the US dollar has edged down significantly against the euro and the Swiss franc during early deals on Friday.

Euro - European Markets

The euro has fallen sharply against the US dollar this morning, shedding almost a cent after German finance minister Peer Steinbrueck said the euro was at risk if the EU's Stability and Growth Pact isn't taken seriously.

"Germany, as a member of the EU, has a massive interest in the credibility of the Stability and Growth Pact, which as you know is not taken so seriously by some," Steinbrueck said in a speech to parliament.

Consumer price data from three German regions released late yesterday and earlier today suggest that the country-wide inflation rate for March will be virtually flat, which is much lower than expected.  The eastern states of Brandenburg, and Hesse, home to the financial hub Frankfurt, both reported annual inflation of just 0.2% today, due to lower heating oil and fuel prices.

Other Currencies - Highlights

Retail sales in Japan saw their biggest fall in seven years in February, adding to fears of a deepening recession. Shoppers spent 5.8% less than a year earlier, bringing the total value of sales to 9.98tn yen, according to government figures. The figure is more than twice January's year-on-year decline of 2.4% and is the sixth monthly decline in a row.

Meanwhile, South Korea and Vietnam also reported weak economic data, as the slowdown hits Asia's economies. South Korea's economy grew less than first estimated in 2008, expanding 2.2%, compared with an initial estimate of 2.5%.

Vietnam's economic growth rate slowed to 3.1%, its lowest rate in a decade, according to an estimate for the first quarter.

The New Zealand economy shrank at its fastest rate in 17 years in the last three months of 2008. GDP fell by 0.9%, the most since 1992, led by a drop in manufacturing, according to Statistics New Zealand. New Zealand entered recession last year for the first time since 1998.