Pound Sterling - UK markets

Sterling has continued declining in the early European session. The pound's rally from 1.58 low on Wednesday was capped at an intra-week high at 1.61 on Thursday and has since retreated currently trading at 1.59. If the Pound consolidates below here, next support levels waver between 1.59 and 1.58 as technical analysts urge caution and a flexible outlook, hoping for a rally to new highs later this year.

US Dollar - US Markets

The US dollar rose against the Japanese yen for the first time in five days up to 89.20 from as low as 88.00. Last week, a worse-than expected NFP report rained on the parade of recent confidence in an economic recovery. However, yesterday's data strengthened optimism showing a nine-month low in unemployment claims and advances in retails sales.

Federal Reserve Chairman Ben Bernanke said late on Thursday that the Fed had the tools and the ability to pull back its flood of cash and loans to the economy, allowing the dollar to claw its way back from this week's fall.

Euro - European Markets

After a two-week high at 1.48 against the US dollar on Thursday, the euro could not hold those levels and has retreated during Asian session to a 1.47 low.

Industrial production in France has emerged higher than expected at 7.0%, whilst the German current accounts surplus for August narrowed to 4.6 billion euros, worse than market expectations.

Other Currencies - Highlights

The yen fell against all its major counterparts after machinery orders in Japan gained less than expected, confirming signs that its recovery will lag behind that of other economies.

Elsewhere, the Australian dollar and New Zealand dollar retreated from 14-month peaks, the Aussie declined towards a 0.90 low during the Asian session after reaching a high on Thursday. The dollar versus Swiss franc failed to break the pivot support at 1.02 which resulted in a rebound to the upside to trade within the minor descending channel.

Trading for the dollar versus loonie pair remained below critical support at 1.05, the general trend for the Canadian dollar remaining to the downside targeting 1.04 and 1.00 respectively.