Pound Sterling - UK Markets

The UK economy will contract 3.7% in 2009 and output will also decline mildly in 2010, the Organisation for Economic Cooperation and Development has predicted.

The OECD said a recovery would start in 2010, with the weaker pound, a marginally improved global environment and the UK's various policy measures helping lift the economy from a recession that started in mid-2008. However, the organisation said the economy would still contract 0.2% in 2010.

If right, the UK economy is headed for its deepest downturn since World War II. The economy hasn't contracted more than 2.1% since records began in 1949. Only once - in 1980 and 1981 - has output fallen two years running.

The OECD's latest forecasts represent a major downward revision for the UK economy. In its previous report in November, the OECD saw the UK economy contracting 1.0% in 2009 and growing 0.7% in 2010.

US Dollar - US Markets

Ongoing contraction is expected in the Institute for Supply Management's Chicago Manufacturing report today, but economists suggest that the pace of deterioration in the sector could be slowing. The headline ISM Chicago PMI index is expected to rise to 34.4 from 34.2.

Euro - European Markets

French debt rose in the fourth quarter of last year to €1.33 billion, or 68% of GDP, up from the 66.1% of GDP it had reached in the previous three months, national statistics office Insee has said.

Last year, the budget deficit of the eurozone's second-largest economy rose to 3.4% of GDP, up from the 2.7% of GDP the previous year, Insee said. France's public accounts are feeling the pain of a worse than expected downturn, with GDP forecast to drop by at least 1.5% this year.

A report from national statistics office Istat shows that Italian retail sales rose unexpectedly in January. Retail sales rose an unadjusted 0.7% on the year, rebounding after having fallen for three consecutive months. Economists had anticipated a 2.2% drop on the year and a 0.2% drop on the month.

Germany's unemployment rate rose to 8.6% in March as the global economic downturn continued to tighten its grip on Europe's largest economy. In seasonally adjusted terms, the rate rose to 8.1% from 8%, official figures also showed. This equates to 3.4 million people, an increase of 69,000. Unemployment rates have been rising across Europe, with the Spanish jobless rate the highest at more than 14%.

Other Currencies - Highlights

Japan's unemployment rate has risen to a three-year high as companies continue to slash jobs. The jobless rate rose to 4.4% in February, from 4.1% in the previous month, the government has said.

Separate data showed that consumer spending last month fell by 3.5% from a year earlier. Prime Minister Taro Aso is planning to announce a new package of stimulus spending to try to revive the world's second-biggest economy.