The UK economy contracted -1.9% in the first quarter of 2009, more than economists expected with record declines in the manufacturing and service sectors. This news has sent the pound plunging against the dollar and euro as investors also remain wary of record levels of government borrowing.

Pound Sterling - UK Markets

Sterling is sliding this morning against its major currency partners with the release of first quarter GDP figures showing the UK economy contracted significantly in early 2009. This morning the pound has slid over 1% on the euro, yen and New Zealand dollar, and 0.4% against the US dollar.

ONS statistics show the UK economy contracted -1.9% in the first quarter of 2009. This follows a -1.6% contraction in the previous quarter and was substantially higher than the -1.5% predicted by most economists. This takes the annual growth rate to -4.1%, a contraction significantly larger than the 3% predicted by Alistair Darling earlier in the week. Retail sales figures, a key indicator of consumer spending, rose 0.3% in March. Sterling is likely to continue its bearish run today as these figures, along with the 12.4% budget deficit, play on the minds of investors. Credit agency Moody’s has also expressed concern over the levels of government borrowing, which is set to reach GBP175 billion this year, prompting concerns the UK may lose its AAA credit rating. There is no further data in the UK today.

US Dollar - US Markets

The dollar is weaker across the board this morning, down 0.9% against the euro and yen, gaining only on the pound in terms of the major currencies.

The growing perception of ‘green shoots’ emerging in the US economy this week has supported a series of rallies in markets, boosting some of the higher yielding currencies at the expense of the dollar. Solid corporate earnings from Bank of America and Citigroup and increased funding from G20 nations have contributed to the view that the worst of recession may be easing. These rallies however, remain capped by bouts of negative data, with news that home sales fell 3% in March renewing concerns over the property market. The Federal Reserve’s methodology for stress testing banks is released today with results of the tests due on May 4. Market opinion currently is that the purging of toxic assets is far from over and the extent of credit write downs could damage positive sentiment in weeks to come. Durable goods orders and new home sales are out today.

Euro – European Markets

The euro has gained across the board this morning, strengthening to test 1.32 against the US dollar and gaining over 1.3% on the pound. The single currency has dipped slightly against the yen, Swedish kronor and Swiss franc.

The euro has benefitted from a glut of negative data released in the UK this week and rallies in equities supporting slightly higher risk appetite. Economic data yesterday showing the pace of recession in the Eurozone easing also boosted confidence and the euro has moved to consolidate on this support. This morning, figures show the German IFO business climate and expectations rose to 83.7 and 83.9 respectively, which bode well for the rest of the region. There is no further data from the Eurozone today.

Other Currencies - Highlights

The Australian and Kiwi dollars have capped off a week of declines against the yen on concerns that recession will reduce demand for the export products of the two nations. Next week markets are likely to focus on the Reserve Bank of New Zealand’s interest rate decision where a 0.5% reduction is expected, and the National Bank of Australia’s business confidence survey.

The euro has risen against the US dollar this morning with economic news from the eurozone showing the pace of recession easing in the last month. Yesterday market focus was on the pound with the UK budget and 6.7% unemployment rate causing a dip in sterling exchange rates. However this morning sterling has recovered, finding support above 1.45 on the dollar and 1.11 on the euro.

Pound Sterling - UK Markets

The pound dipped to 0.90 versus the euro yesterday after the announcement of “eye watering” government debt in the UK rattled markets. Sterling lost ground the euro and dollar throughout the day but appears to have been given the benefit of the doubt this morning, maintaining support above 1.45 and 1.11 on the dollar and euro respectively.

The UK budget announced yesterday has been subject to in-depth economic analysis and will continue to do so over the coming days. Among the headline grabbers was Darling’s top tax rate of 50% and predicted growth contraction of 3-3.5% for 2009. Higher tax levels raised the issue of competitiveness internationally and prompted speculation that top investors would keep their money elsewhere. The government also confirmed the view that a weak pound in the short term will give export markets a much needed boost. The budget deficit, predicted to reach 12% of GDP, put gilt prices under pressure and sent Sterling exchange rates lower. Unemployment, the housing market, auto sales and the ‘greening’ of new industry also took precedence in the new budget. Bank of England minutes released yesterday showed the MPC unanimously voted to maintain current interest rates and quantitative easing levels. To cap off a big week in the UK, GDP figures and retail sales are due tomorrow.

US Dollar - US Markets

The dollar has weakened this morning, down over 0.5% against the pound, Australian and Kiwi dollars as positive news from the Eurozone has revitalised investor confidence. The dollar is currently in the vicinity of 0.68 against the pound, 0.76 against the euro and 98 against the yen.

Renewed concern over the banking sector caused a drop in equities late in the day yesterday as markets continue to oscillate between positive and negative territory depending on the latest set of data released. News that Morgan Stanley operated less profitably than expected, combined with the IMF report that contradicted UK growth predictions caused a plunge in risk appetite but markets have rallied this morning on the back of positive news from the eurozone. Initial and existing jobless claims, as well as new home sales for March are due in the US today.

Euro – European Markets

The euro has rallied this morning, boosted by a flight from sterling following the announcement of the UK budget and on the back of economic data showing recession easing in the eurozone. The euro is currently trading at 1.30 against the dollar and is up to 0.89 against the pound.

The German purchasing manager index out this morning has shown decline at the slowest rate in 5 months in both the manufacturing and service sectors. Industrial new orders for the eurozone also dropped less than expected and the EMU current account came in a EUR-8.1 billion. In addition to the news that Credit Suisse operated profitably for the first quarter of 2009 and French economic sentiment rose for the second consecutive month, this has supported the euro and moderated market opinion that the eurozone is becoming more entrenched in recession. The Swiss ZEW survey is due later in the day with Germany’s IFO business climate and expectations survey due tomorrow.

Other Currencies - Highlights

The Australian dollar continue to tread familiar ranges against the dollar and euro but spiked against the pound overnight as sterling was battered by low growth predictions and high budget deficits from the UK budget. Core inflation in Australia remained relatively high and economists predict the central bank is nearing the end of its interest rate reductions. Poor results for Morgan Stanley sent the New Zealand dollar lower as risk appetite diminished and comments from New Zealand finance minister Bill English, that New Zealand may be in its sixth quarter of recession also hurt the Kiwi currency. The Australian and New Zealand dollars are trading in the vicinity of 2.04 and 2.59 respectively.

Foreign exchange markets will focus on sterling today with the annual budget released in the UK. Equity markets rallied overnight on the back of comments from US Treasury Secretary Geithner. This fuelled a bounce in currency exchange rates that failed to include the euro and illustrated the pressure weighing on the euro at present.

Pound Sterling - UK Markets

The pound has weakened this morning against most of its international currency partners in the run up to the budget released today. The pound is trading in the vicinity of 1.45 against the US dollar and is down 0.5% against the euro with further exchange rate volatility likely throughout the day.

This morning’s budget is expected to be the most negative in a generation predicting a 3-3.5% growth contraction for 2009 and a deficit climbing to 12% of GDP. The government is also expected to announce plans for spending cuts and rising tax from 2011 along with moves to revitalise the property market and create thousands of new jobs in the UK. Minutes from the last Bank of England meeting also released this morning are likely to have little affect on markets as it remains too early to asses the effects of quantitative easing. The ILO unemployment rate has risen to 6.7% in the three months to February and public sector borrowing has increased to GBP19.1 billion, significantly ahead of market expectations. Also this morning, HM Revenue and Customs has announced a 40% jump in home sales for March. The budget is released at 12:30.

US Dollar - US Markets

The dollar has gained against the pound and euro this morning as uncertainty over the UK budget and fallout from the IMF report are weighing on the major currencies. The dollar is trading in the region of 0.68 versus the Pound and 0.77 versus the euro and has gained on the Canadian, Australian and New Zealand currencies.

A speech from Treasury Secretary Geithner’s yesterday led markets to a brief rally as he reassured investors of bank balance sheets. Equity markets and currency exchange rates are largely determined by the prevailing mood regarding the banking sector at present as this determines international appetite for risk. The USD-GBP exchange rate will likely be affected by the UK budget released today and we could see a weakening of the pound against the dollar. US mortgage applications and the housing price index for February are released later in the day.

Euro – European Markets

The euro continues its bearish run of the currency markets this morning, trapped below 1.3 against the US dollar and 0.89 against the pound. The euro has also declined against its Asian currency partners as details of an IMF report predict a long and entrenched recession for emerging European nations.

Positive news yesterday came in the form of the German ZEW economic survey which showed a surprise rise in confidence from -3.5 to 13. However, the fact that the euro failed to fully capitalise on this speaks volumes about market perception surrounding the Eurozone at present. Continued uncertainty from the ECB and details of the IMF financial stability report are weighing on the euro. The IMF forecast yesterday that European banks could face more substantial write downs and require greater capitalization than US banks. The IMF also expects a net investment loss to Eastern Europe with little hope of recovery in 2010 and 2011. There is little of note in the Eurozone today with the EMU current account, purchasing manager index and industrial new orders released tomorrow.

Other Currencies - Highlights

The yen advanced overnight as Japanese trade balance figures show the slump is slowing down. March export figures snapped a four month spell of record losses and this, in combination with worries over what further stress tests could expose in the US, caused the yen to advance on a basket of international currencies.

The Bank of Canada cut interest rates to a record low of 0.25% yesterday and plans to leave it there until inflation returns to its 2% target. The Canadian economy is expected to shrink 3% this year and the central bank is expected to announce a framework for quantitative easing on Thursday. This is weighing on the Canadian dollar at present. Leading indicators are published today.

Switzerland’s biggest bank, UBS, has said it will seek to cut costs by shedding 8,700 jobs by 2010. The news came as the bank announced it had lost about 2bn Swiss francs in the first three months of 2009. UBS has been one of the biggest banks hit by exposure to the sub-prime loans crisis in the US and ensuing turmoil. The Swiss bank is also being probed by the US authorities over alleged fraud and tax evasion involving US citizens.

Pound Sterling - UK Markets

Interest from home-buyers is starting to gain “real momentum”, although sales remain low, the Royal Institution of Chartered Surveyors has said. While new enquiries in the housing market increased for the fifth consecutive month, surveyors are still selling fewer than 10 homes on average each over the last three months. Nonetheless, there the poll found increased optimism that sales would pick up during the year, but it remained tough for first-time buyers.

With little fresh news from elsewhere following the Easter holiday, currency markets have been taking their cue from equities. With London FTSE index falling 0.3 percent in early trade, the pound has fallen against the US dollar this morning with investors once again returning to the perceived safety of the US currency. The pound will currently buy between 1.4804-1.4908USD.

US Dollar - US Markets

Retail sales in the US unexpectedly fell last month as rising unemployment forced consumers to ease back. In a report released yesterday, the Commerce Department said that the US retail had seen a 1.1% decrease in March. Car dealers, electronics stores and restaurants led the decline.

However, with Federal Reserve Chairman Ben Bernanke echoing Barack Obama’s comments by stating that the “sharp decline” in the US economy is slowing, the dollar has been enlivened by safe haven flows against the pound and the euro. While there is still unease ahead of earnings from the likes of Citigroup and JP Morgan Chase, the euro fell around 0.6% against the greenback and is now currently trading at an interbank rate of between 1.3265-1.3286USD.

Euro – European Markets

Following the release of the German March wholesale price index report, the euro showed mixed trading against its major counterparts. While the euro eased against the dollar and the franc, it gained slightly against the pound.

The euro is currently worth around 0.8907-0.8912 against the pound.

Other Currencies - Highlights

China’s economy is showing some signs of recovery from the global financial crisis, the country’s Prime Minister Wen Jiabao has said. China has already implemented a 4tn yuan stimulus package to boost economic activity. Despite its problems, China’s economy - the third biggest in the world - is forecast to grow by at least 5% this year, in stark contrast to many major global economies that are shrinking.

Poland’s government is to ask the International Monetary Fund for a USD20bn credit injection to help tackle the economic crisis. Finance Minister Jacek Rostowski said it would increase bank reserves and make Poland “immune to the virus of the crisis and speculative attacks”. Rostowski said the move would increase state bank reserves by about a third.

The government’s much-criticised cut in VAT is working and has led to a big boost in consumer spending, according to The Centre for Economics and Business Research. CEBR says that the cut, which took effect on 1 December 2008, has led to £2.1bn of extra sales. The centre says the growth in retail spending is “remarkable” and argues that the temporary cut of 2.5%, which is due to expires in January 2010, should be extended for a further six months.

Pound Sterling - UK Markets

With the UK celebrating Easter over an extended four-day weekend, market news is a little light on the ground today. However the pound has this morning hit a 4-day interbank high of between 0.8863-0.8963 against the euro. Citing trading patterns, analysts from BNP Paribas SA are anticipating the euro declining to a six-week low of around 88.50 later this week.

US Dollar - US Markets

A day after Barack Obama said that he sees “glimmers of hope” in the US economy, Goldman Sachs has reported a net quarterly profit of USD1.8bn, beating analyst expectations. The previous quarter had seen the firm post its first quarterly loss since going public in 1999. Some analysts say the earnings results could suggest the worst could be over for finance firms.

The announcement from Goldman Sachs follows a statement from Wells Fargo that said the bank expected a record net profit for the quarter. Citigroup Inc. and JP Morgan Chase & Co. are both due to report earnings this week.

Following the announcement, the euro is down slightly against the US dollar with investors seeing the announcement as a strong sign that the US economy is on the up. The 16-nation currency will currently buy USD around 1.3282-1.3353 at an interbank rate.

Euro – European Markets

The German government announced over the weekend that they will decide on 21st April whether to set up a “bad bank” to take on banks’ liquid toxic assets, allowing them to return to their core business. The issue has been under discussion for several weeks and received another impetus last month after the US administration unveiled its Public-Private Investment Program, aimed at helping banks to sell troubled assets to public-private partnerships.

According to the Monster Employment Index, unemployment in the European Union looks set to rise further in March as companies continue to trim costs and employment opportunities recede. The Index slid three points to 112 in March after a surprise increase in February. Monster said the steepest declines in online recruitment opportunities were in the marketing, public relations and media, environment, engineering and auto sectors.

Other Currencies - Highlights

Singapore’s economy shrank by 19.7% in the first quarter of 2009 compared with the previous three months, its biggest quarterly contraction on record.  The government now expects the country’s GDP to contract by between 6% and 9% this year, much more than the previous estimate of between 2% and 5%. The country’s Ministry of Trade and Industry said the economy’s performance was much worse than expected.

Business leaders have warned that UK unemployment will reach 3.2 million in the third quarter of 2010. The British Chambers of Commerce said its survey showed a “worrying deterioration” in manufacturing, with exports reaching 10-year lows. The BCC said one bright spot came in the service sector where the rate of decline appeared to be slowing.

Pound Sterling - UK Markets

UK manufacturing output declined for the 12th straight month in February, while the quarterly measure recorded its steepest drop since records began in 1968, a report from the Office of National Statistics has said.

Although manufacturing output fell 0.9% on the month in February, it compares with a revised 3.0% drop in January and marks the smallest monthly drop since August 2008.

Following the data, the Pound is crawling higher against the US dollar to an interbank rate of between 1.469-1.487, and has risen to an interbank rate against the euro of around 0.9084.

US Dollar - US Markets

The US dollar has risen against the euro and the yen on Monday as American and European stock markets fell lower as recent hopes about economic recovery stalled and investors sought out safe haven currencies. Worries about the financial sector in particular have hit market sentiment hard as banks such as Bank of America, JPMorgan Chase and Fifth Third Bancorp took a series of broker downgrades.

At one point yesterday, the continually weaker Japanese yen dropped to a six-month low against the greenback. The dollar rose to around 101.5 yen before easing back down to around 100 yen.

Euro – European Markets

On an annual basis, retail sales fell by 4% in the eurozone during February, a figure that is 0.6% down from January’s figures. Retail sales have been under pressure from rising European unemployment, which currently stands at 8.5% across the 16-country eurozone.

Other Currencies - Highlights

The Reserve Bank of Australia has cut interest rates to a 49-year low. The cut of a quarter percentage point take interest rates to 3%. Most economists had been predicting no change to rates.

Separately, the Bank of Japan has kept its rates at 0.1%, in line with expectations. However, the Japanese central bank expanded the collateral it will accept in return for loans to commercial banks, now accepting loans on deeds to municipal governments.

A revival in global risk appetite has propelled the South African rand to a near six-month peak against the US dollar. The pair are currently trading around R9.099-R9.139. A surprise contraction in South Africa’s trade deficit and the economy’s resilience in the wake of the global financial crisis have all conspired to boost the rand by around 7% in the past week.

According to the Institute for Fiscal Studies, the UK’s deficit is about 2.7% more than Chancellor Alistair Darling acknowledged in the pre-Budget report. The government may have to find £39bn a year by the end of 2015/16, to plug the gap in its finances, the IFS predicted.

Mr Darling, who will present his Budget on 22 April, has said the recession will be more severe than forecast. In making its calculations, the IFS assumed that the government would ultimately have to cover bank losses of £130bn, which have so far not been included in the government’s calculations.

Pound Sterling - UK Markets

UK car sales fell by 30.5% in March, compared with the same month last year, the latest industry figures have shown. The number of new UK registrations in March was 313,912, down from 451,642 the year before, said the Society of Motor Manufacturers and Traders. SMMT chief executive Paul Everitt says the government needs to do more to boost confidence.

The pound has hit a two-month high against the US dollar in morning trading as investors reacted to further gains made by UK equities. A rise of over half a cent has taken the pound to interbank levels not seen since February – between 1.4601 and 1.4987.

US Dollar - US Markets

According to figures from the Department of Labor, the number of people employed in the US fell by 663,000 in March. The jobless rate rose to 8.5% from February’s figure of 8.1%, meaning it is still at its highest since 1983. It means that since the recession began in December 2007, 5.1 million jobs have been lost, 3.3 million of them in the past five months.

Euro – European Markets

Data from European Union statistics agency Eurostat has shown that eurozone industrial producer prices posted their biggest drop in annual terms for almost 10 years in February.

The report will heap pressure on the European Central Bank to lower interest rates further in the months ahead, with factory gate prices dropping 0.5% on the month, leaving them 1.8% weaker than in February last year. The drop is the seventh consecutive monthly decline in prices.

The Bank of Spain has predicted that the country’s rate of unemployment will reach 17.1% in 2009 and 19.4% in 2010. Spain currently has the highest unemployment rate in the European Union, with a rate of 15.5% in February, nearly double the EU average.

Other Currencies - Highlights

The Czech koruna has risen to a 2-week high against the US dollar after a report showed that the Czech trade surplus increased more than expected in February.

A report by the Czech Statistical Office said the trade surplus stood at CZK8.69 billion in February, up from CZK3.46 billion in the previous month. Economists expected the surplus to increase to CZK5 billion. A year ago, in February, the surplus was CZK13.03 billion. In February, exports dropped 22.2% year-on-year to CZK169.4 billion, while imports fell 21.5% to CZK160.7 billion. At the time of writing, interbank levels for the koruna-dollar pair are around 19.495 and 19.535.

World leaders yesterday agreed on a $1.1 trillion injection of financial aid into the global economy, with Gordon Brown claiming that the grand bargain he had brokered represented “a coming together of the world” which would speed recovery from the worst recession since 1945. The deal contains tougher-than-expected measures to tighten financial regulation, including a clampdown on tax havens.

Pound Sterling - UK Markets

Sterling jumped to a seven-week high against the US dollar today after UK service sector data posted a higher-than-expected reading. The PMI Services activity index rose to 45.5 in March from 43.2, the highest reading since September, and beating economists’ forecasts of 43.5. The surprise increase caps a good week for UK economic data with PMI Manufacturing and PMI Construction releases improving as well.

The pound has since risen against the US dollar to between 1.4498-1.4898, the highest figure since late November. The euro is now down around 0.4 percent against the pound at a figure around 90.91-90.95 pence.

However, UK house prices fell by 1.9% in March compared with the previous month, according to the Halifax. The average UK home now costs £157,226, at least £30,000 less than a year ago. When comparing the average price from March compared with March 2008, the drop was 17.6%. The reported month-on-month change comes in contrast to the “surprise bounce” of 0.9% in March reported yesterday by the Nationwide Building Society.

US Dollar - US Markets

With investors’ risk appetite boosted by the outcome of the G20 meeting, the US dollar rose briefly above 100 yen in Asian trading on Friday, the first time it had done so since early November 2008. Caution has since returned to the market, ahead of US employment figures due later in the day, which are expected to show the US economy continued to lose jobs in March. Economists estimate that the US economy lost 656,000 jobs in March.

Euro – European Markets

More dire news from Spain as the fall in industrial production continued to gain pace in February, pointing to a deepening slump for the eurozone’s fourth-largest economy. According to preliminary data from Spain’s National Statistics Institute, Spanish February industrial production fell 22% in calendar-adjusted terms, following a 21% decline in January and 20% fall in December.

Other Currencies - Highlights

China’s manufacturing sector showed some growth in March for the first time in six months. The purchasing managers index from the China Federation of Logistics and Purchasing rose to 52.4 from February’s figure of 49. Any figure above 50 indicates an expansion in the manufacturing sector. With manufacturing accounting for about 40% of China’s economy, it has been hit by falling demand from its customers in recession-hit western economies.

According to the Federal Statistics Office of Switzerland, Swiss consumer prices fell for the first time in five years in March, dropping by the biggest annual amount in almost 50 years, as the central bank said it would fight deflationary threats. The drops were bigger than forecast and followed unexpected monthly and yearly rises of 0.2 percent in February. Following the report, the franc has fallen against its major counterparts. The Swiss currency is currently trading between 1.5274-1.5474 against the euro, around 1.115-1.1370 against the US dollar and between 1.6482-1.6882 against the pound, an 18-day low.

Consumer prices in the eurozone slowed to a record low year-on-year increase of 0.6% in March, down from a 1.2% year on year increase in February, according to the Flash estimate released by Eurostat.

Eurozone inflation rate has never been this slow 1996 when records began. This is just the latest reason for the ECB to cut interest rates on the next monetary policy meeting on Thursday.

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.

The head of the International Monetary Fund has stressed the need for unity among world leaders at the G20 meeting in London next week. “It is absolutely necessary for leaders to find agreement,” said IMF managing director Dominique Strauss-Kahn. The UN has also called for urgent action at the G20 to prevent the financial crisis developing into a “catastrophe for human development”.

Pound Sterling - UK Markets

Mortgage approvals for house purchases in Britain rose more than expected in February, according to official figures from the Bank of England. There were 38,000 approvals in the month, up from 32,000 in January – the highest number since May 2008.

There was also the biggest net repayment of consumer debt since records began in April 1993. Consumers repaid £245m worth of credit more than they took out in February, having taken on an extra £165m of credit in January.

However, mortgage approval data hasn’t stopped the pound from tumbling today, after a report by the property industry group Hometrack showed that the average price for a home in England and Wales plummeted by a record 10.3 percent on year in March. March’s annual fall was the biggest yet in Hometrack’s monthly survey of estate agents and surveyors, which started in 2000 and has persistently reported lower price falls than official government data.

US Dollar - US Markets

Supported by lower oil prices, the US dollar soared in early training to a 12-day high against its UK, European and Swiss counterparts as concerns about the global economy prompted investors to seek the safety of the world’s most liquid currency.

However, the dollar has since slumped back against the yen amid fresh concerns about struggling US carmakers General Motors and Chrysler. The fall follows comments from a rescue task force that said their plans for recovery are “not viable.”

The euro, however, remains weaker against the greenback as investors anticipate European Central Bank policy-makers will reduce interest rates when they meet on Thursday.

Euro – European Markets

The Irish Republic’s economy has suffered its largest contraction in recent decades. The Irish economy shrank by 7.5% in the last three months of 2008 compared with the same period a year earlier, a report by the Central Statistics Office has shown.

The construction industry, which has faced a housing market slump, suffered a 24% fall in output, the biggest fall on record. In the whole of 2008 the economy shrank by 2.3%, the first decline since 1983. Ireland has experienced a sharp downturn, becoming the first eurozone country to fall into recession in 2008.

The economic crisis in Spain has taken a new turn on Monday after the country became the first in the euro zone to report disinflation on the heels of a weekend takeover of a Spanish savings bank by the government. Preliminary data showed that harmonised consumer prices fell 0.1% in March on an annual basis, against a 0.7% rise in February, according to the Instituto Nacional de Estatdistica. It was the first decline in consumer prices since the INE started tracking figures in 1961. Analysts had been expecting a rise in prices of around 0.4%.

Other Currencies - Highlights

Official figures show that Japan’s manufacturing output has fallen for the fifth consecutive month. Industrial production dropped 9.4% in February, but rebounded from January’s record 10.2% plunge, Japan’s Ministry of Economy, Trade and Industry said.