Pound Sterling - UK Markets

Exchange rates for the pound are marginally lower this morning after the manufacturing PMI came in weaker than expected. Sterling is trading at lower against its major currency partners, currently valued at 1.58 against the US dollar and 1.09 against the euro.

Nationwide house prices released this morning show house prices have climbed 0.9% in September, rising for the fifth consecutive month and reaching levels comparable to in 2008. Low interest rates have helped the property market recover and this is expected to lift the UK out of recession. The construction sector PMI has come in this morning at 46.7, worse than expected by markets and this could cap sterling sentiment throughout the day. There is no further data in the UK today.

US Dollar - US Markets

US dollar exchange rates are higher this morning after risk aversion rose in the market following weak labour and manufacturing figures from the US yesterday. The US dollar has gained 0.4% against the pound while remaining unchanged against the euro.

Jobless claims in the US rose by 551,000 and unemployment is expected to peak at a 26-year high of 9.8% when figures are announced today. The ISM manufacturing survey also came in weaker than expected and Ben Bernanke noted that the economy remains sluggish while unemployment is expected to stay above 9% throughout most of 2010. Today markets will be interested in non-farm payrolls and the US unemployment rate out this afternoon.

Euro - European Markets

Euro exchange rates are higher this morning, rising against its major currency partners with the exception of the safe haven US dollar, Swiss franc and Japanese yen. The euro is currently trading at 1.45 against the US dollar and 0.91 against the pound.

The single currency dipped against the US dollar yesterday after weak manufacturing figures led to a rise in risk aversion. The euro's recent appreciation has left the ECB worried over the rate of economic recovery and this also reduced demand for the single currency. This morning's figures show the producer price index rose 0.4% in August but remains -7.5% down on last year. Euro exchange rates are likely to be affected by US labour market figures out today.

Other Currencies - Highlights

Exchange rates for the Australian and New Zealand dollars sunk against the pound overnight, after weak US employment and manufacturing data led to a spike in risk aversion. The Australian dollar has lost over 1% against the pound while the kiwi is trading around 0.7% lower. The higher yielding currencies will likely be influenced by US figures out today.

Currency exchange rates for the Mexican peso fell to a one-month low against the US dollar after unemployment in the US rose, fuelling speculation that this would dampen demand for Mexican exports. Government debt figures in Mexico are expected to rise to over 50% of GDP and the government is supporting a "weak peso" policy at present.