UK currency fell against the dollar and the euro late on Friday after the Sunday Times said Bank of England policy maker Adam Posen may support an extension of the central bank's asset-purchase program.
 
Meanwhile the Australian and New Zealand dollars rose as a Reserve Bank of Australia official said a move to 'more normal' interest rates was appropriate and growing stocks boosted demand for higher-yielding assets.

 Federal Reserve Board Chairmen Ben Bernanke is due to deliver a speech today which may set the tone for the major currencies and clarify today's market.

Pound Sterling - UK markets

The pound fell 0.5% this morning to USD1.626 and was 0.7% weaker at 91.73 pence per euro. Having reached a three-week high on Friday, sterling has remained consolidating during Monday's Asian session.

UK currency slipped at the end of last week after Bank of England monetary policy committee member Adam Posen said that quantitative easing should continue. Last weeks rally had formed a "bullish engulfing" candle on the weekly chart.

US Dollar - US Markets

The dollar's recovery from an 88.80 low against the yen on October 14th was capped at 91.30 last Friday, and the pair has since retreated during Asian session to 90.55 support area, which is being tested ahead of the European session opening.

The dollar has been under relentless pressure in 2009 on expectations that US interest rates will remain low and on talk that it is replacing the yen to become the preferred funding currency for leveraged carry trades.

Euro - European Markets

 The euro has reached levels below USD1.484 today, hitting 1.482 on its retreat from a year to date high of USD1.496 reached on Friday. However, the support area has remained intact and the Euro bounced up reaching back to levels right below 1.49 later this morning.

The euro has made gains against Japanese currency, advancing to 135.62 yen from 135.38 late in New York on Friday.

Other Currencies - Highlights

 The high-flying Australian dollar rose 0.4% to USD91.98 this morning and New Zealand's dollar gained 0.8% to 74.65 against American currency.

The yen held near three-week lows against the US dollar on Monday on expectations Japanese investors will short the yen as they step up purchases of higher-yielding foreign bonds.

Japanese currency has also struggled near two-month lows against the US dollar and was not far from a one-year low against the Australian dollar at 84.20 yen. However this drop may be temporary, with some investors seeing an US recovery still some way off.