The euro is sitting at a 5 week low against the US dollar this morning as the single currency continues to be plagued by uncertainty surrounding ECB strategy. Larger than expected credit write downs at Bank of America yesterday reignited fears that the worst is not over in the financial crisis putting an end to the recent 6 week rally in global equities.

Pound Sterling - UK Markets

Sterling has declined against the US dollar, finding support just above the 1.45 level, as a wave of risk aversion swept markets overnight. This morning the pound is largely unchanged against the euro, trading in the vicinity of 1.12 and is down over 1% on the New Zealand dollar.

Inflation figures out this morning show consumer prices falling in the UK. The core consumer price index for March is running at 2.9%, taking the annual rate of inflation to 1.7%. The retail price index is running at 0% for March, taking the annual rate to -0.4% largely due to falling house prices and lower interest rates. The lower cost of energy is also fuelling the downward trend and this is helping to bring inflation inline with the government target of 2%. This morning Tesco has reported a GBP3 billion profit, a 10% rise since the last financial year. We can expect some volatility for the pound during the rest of the week with Bank of England minutes, the annual budget, ILO unemployment rate and continuing jobless claims out tomorrow.

US Dollar - US Markets

The US dollar strengthened overnight, trading in the vicinity of 0.77 versus the euro and 0.68 versus the pound as credit losses at Bank of America prompted fresh fears over the stability of the financial sector. This morning the higher yielding currencies have trimmed losses against the dollar with the pound, Aussie and Kiwi dollars all staging minor rallies.

Bank of America’s corporate earnings released yesterday show that despite a USD4.2 billion first quarter profit, the bank will be forced to set aside over USD13 billion to cover toxic loans. This ends up close to a break even performance and the news rattled markets, renewing fears that the worst of the recession may not be over. Bank of America shares lost 24% while Citigroup shares declined more than 16%. The news also affected global equities with the S&P closing down 4.3% and the Dow Jones losing 3.6%. The losses also put an end to the 6 week rally in global markets and economists predict markets are entering a phase of short term consolidation with credit losses expected to get worse before they get better. In the US today Treasury Secretary Geithner is to make a speech and the Washington Post Consumer Confidence survey is due.

Euro – European Markets

The Euro continues to fall against the dollar, reaching a five week low of 1.28 during Monday’s US session and remains bearish this morning. Against the pound the euro staged a slight recovery yesterday and the euro has also declined against the Australian and New Zealand dollars.

Statistics released in Germany this morning show the producer price index fell -0.7% in March, taking the annual rate to -0.5%. The public debate between ECB members over the best course of action for the Eurozone continues to pressure the single currency in the absence of any positive financial data. Uncertainty over the pending ‘unconventional measures’ from the ECB is making investors nervous although a reduction in the base rate by 0.25% seems likely. Results of the German ZEW economic sentiment survey are due out this morning.

Other Currencies - Highlights

Asian equities fell across the board yesterday, triggered by renewed fears over the state of the financial sector in the US. The yen ended three days of gains against the euro and dollar although recent signs of improvement in the Chinese economy have acted as a buffer to drastic selling. Also this morning the Indian Central Bank has reduced the repo rate, at which the bank makes short term loans into the economy, by quarter of a percentage point to 4.75%. This is the sixth time since October the rate has been reduced and the Indian Central Bank expects growth to slow to 6% this year. The Canadian Central Bank is to make an interest rate decision today.

The CBI has predicted the UK economy will contract by 3.9% in 2009, more than twice the amount predicted by Alistair Darling late last year. The euro has reached a one month low against the dollar amid concerns that the ECB is not doing enough to safeguard the ailing eurozone economy and US leading indicators released today are expected to show signs of recession easing in the US.

Pound Sterling - UK Markets

Sterling has lost ground against its major currency partners this morning, having declined over 1% against the US dollar and Japanese yen as the looming budget puts pressure on the pound.

The CBI have predicted the UK economy will contract 3.9% in 2009 with a total economic contraction of 5.1% by the end of the recession. This is more than twice the decline predicted by Alistair Darling in his pre-budget report and Wednesday’s budget is expected to downgrade economic forecasts while highlighting increased government borrowing. However recent economic news shows the pace of decline is slowing in both the US and UK and the CBI expects the economy to return to positive growth by the second half of 2010. While the pound remains weak internationally, this could aid recovery through more competitive pricing and there is a reported 1.8% increase in house prices in March. There is no major data released in the UK today.

US Dollar - US Markets

The dollar is stronger this morning, reaching a one month high against the euro and gaining over 1% on the pound after a better than expected performance from Citigroup on Friday boosted Wall Street and global equities. Citigroup reported a profit of USD1.6 billion, its first in nearly 2 years and this improved market sentiment and added to the view that the US economy may be taking its ‘first steps’ towards recovery.

Today Bank of America, Google and Yahoo are to release corporate earning figures and this could lead to a further revival of risk appetite. The leading indicators index is also out today and this is expected to show an easing of recession in the US as Federal cash injections and lower interest rates are work to boost spending and investment. Consumer confidence figures and jobless claims are due out later in the week.

Euro – European Markets

The euro has declined against the US dollar and yen this morning but improved against the pound ahead of the UK budget due on Wednesday. Dropping below 1.3 versus the US dollar, the euro has reached a one month low amid concerns the ECB is not doing enough to protect the eurozone economy. The euro has also hit a 3-week low against the yen.

As the US and UK economy are starting to show signs of the recession easing, the decline appears to be deepening across the eurozone and this, along with mounting concerns over the effectiveness of the ECB is placing the euro under pressure. Comments from ECB members Axel Weber and President Trichet last week also increased speculation of further interest rate cuts. There is no major data released in the eurozone today with Germany’s producer price index and ZEW economic sentiment survey out tomorrow.

Other Currencies - Highlights

Currency exchange rates for the Australian and New Zealand dollars continue to shadow investor appetite for risk. After reaching a 6-month high against the euro on Friday with news of Citigroup profits, the Aussie and Kiwi dollars have slumped this morning with rumours of splits in the ECB leading investors to favour the safe haven currencies. Figures out this morning show Australian producer prices fell 0.4% in the first quarter of 2009 and are running at a 4% increase on the year.

The yen continues to strengthen despite declining export figures and the deteriorating Japanese economy. The Bank of Japan is expected to slash economic forecasts this week as consumer demand collapses and the Japanese economy is expected to contract by 4.2% in 2010. Japan’s leading economic indicators and Canadian foreign investment figures are released today.

Better than expected jobless data in the US yesterday bolstered investor hopes of a tentative stability in the world’s largest economy. While economic data continues to be mixed, there is growing evidence the rate of decline is slowing in the US and to a lesser extent, the UK. This morning sterling has fallen from its 3 month high versus the US dollar but continues to gain against the euro.

Pound Sterling - UK Markets

The pound declined against the US dollar yesterday as better than expected jobless data in the US boosted hopes of a tentative recovery. This fuelled demand for the dollar at the expense of the pound and euro. Sterling has fallen away from 3 month highs against the dollar to trade in the region of 1.48 this morning but continues to gain on the euro, trading at the interbank rate of 1.13 early this morning.

David Miles, chief economist at Morgan Stanley in the UK has added to the positive chorus, noting that recession may ease as quantitative easing and other government initiatives begin to trickle down to the wider economy. Miles is set to replace David Blanchflower on the MPC in June. However, several large question marks remain over the UK economy and sterling exchange rates remain subject to international appetite for risk. The Council of Mortgage Lenders has cited negative equity as a factor in the low property market turnover and sentiment towards sterling is likely to remain muted in the lead up to next weeks budget. There is no data out in the UK today.

US Dollar - US Markets

The US dollar strengthened broadly overnight as better than expected jobless data boosted hopes that the pace of recession may be easing. The Philly Fed manufacturing survey also showed the rate of decline is slowing although both housing starts and new building permits continued to fall on their way to record levels in March.

This news provided fuel for a dollar rally against its international currency partners as it boosted hopes we are beginning to see the ‘green shoots’ of recovery in the US. This morning search engine Google has announced strong profits for the first quarter of 2009, rising to USD 1.42 billion which is significantly better than expected given the downturn in advertising spending as a result of recession. JP Morgan announced better than expected profits yesterday, sending the FTSE 100 to close 2% higher and Citigroup is to release company earnings later in the day. This, combined with a speech by Ben Bernanke could have a positive impact on Wall Street and international markets.

Euro – European Markets
The euro is broadly weaker this morning following Trichet’s comments that the ECB must do everything possible to restore corporate confidence, increasing speculation of further rate cuts and quantitative easing in the Eurozone. The euro continues to decline against the pound but has found support at the 1.3 level versus the US dollar.

This morning Sony Ericsson has announced 2,000 job cuts in an attempt to save EUR400 million after an extremely difficult first quarter. This follows Nokia’s announcement yesterday of a 90% profit fall in the first quarter of 2009 and both companies expect to face challenging markets throughout 2009. The EMU trade balance is released this morning with the producer price index for Germany due early next week.

Other Currencies - Highlights

News that China’s growth rate has fallen to 6.1% prompted a return to safe haven currencies and this sent the Australian and New Zealand dollars lower against their international currency partners overnight. The Aussie and Kiwi dollars both sunk to 2 month lows against the Japanese yen. Australian growth and budget forecasts due in May are now expected to be significantly worse than predicted and New Zealand inflation rates have fallen to 3% as consumer demand wanes in the midst of global recession. This is prompting speculation that the RBNZ may leave interest rates unchanged again this month. The Australian import and export price indices are out this morning.

The eurozone economy shrank more than previously estimated in the last three months of 2008, figures from Eurostat say. Gross domestic product in the 15-nation area (the figures do not include Slovakia) fell 1.6%, not 1.5% as predicted. The drop is the deepest quarterly fall to date and was brought on by a collapse in external trade.

Pound Sterling - UK Markets

UK consumer confidence fell in March as fears continued about jobs, according to the Nationwide whose confidence index dropped two points to 41. UK unemployment recently hit two million for the first time since 1997. Nationwide said consumer confidence was “broadly stable since the start of the year, but feelings about the current labour market have weakened”. Nationwide’s consumer confidence index has now fallen for nine consecutive months.

US Dollar - US Markets

Dallas Federal Reserve Bank President Richard Fisher has minimised downside risks to the US dollar posed by the US government’s rapidly rising borrowing needs.

In a statement delivered at a forum in Tokyo, Fisher said that problems facing other currencies, such as the euro, were bigger than those facing the United States. As a result, dollar-denominated assets will remain relatively attractive, he said.
Following Fisher’s comments and the Eurostat report, the euro is currently around an interbank rate of 1.308-1.336 against the US dollar this morning, down around 0.6%.

Euro – European Markets

French trade deficit widened in February to EUR4.11 billion from a revised figure of EUR3.71 billion in January – a figure slightly lower than expected – data from the Customs Service showed today. Exports in February fell to EUR28.86 billion from EUR29.29 billion the previous month, while imports also fell to EUR32.97 billion from EUR33.01 billion in January.

The Irish Republic has unveiled its second budget in six months to deal with its rapidly contracting economy. The emergency budget includes a large rise in taxes and a cut in spending, to deal with Ireland’s budget deficit. Finance Minister Brian Lenihan also said an independent agency would take over banks’ bad assets to try and restore lending. His forecast for 2009 was also revised down sharply. He expects it to contract by 8% this year, down from 3% in 2008. Dublin is being forced to deal with a deepening recession while being forced to correct the worst deficit in Europe.

Other Currencies - Highlights

Australia’s Department of Employment and Workplace Relations has said that its leading indicator of employment fell to a negative 0.579 in April from a negative 0.336 in March - the 16th consecutive monthly decline. The indicator measures four weighted time-series variables: ANZ newspaper job ads, Dun & Bradstreet employment expectations, the Westpac-Melbourne Institute leading index of economic activity survey and the Westpac-Melbourne Institute consumer sentiment survey, with the first three of these four contributing to the indicator’s decline in April.

The Australian Bureau of Statistics is due to issue March employment data tomorrow. The jobless rate rose to 5.2% in February, up from 4.8% in January.

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.

US President Barack Obama has arrived at Downing Street for a meeting with Prime Minister Gordon Brown ahead of the G20 summit. World leaders are gathering in London to discuss ways to resolve the worst financial crisis since the 1930s.

However, rifts have already begun to emerge, with France threatening to walk away from talks if its demands for stricter financial regulation are not met. The summit takes place amid tight security, with the police warning of “unprecedented” levels of protest.

Pound Sterling - UK Markets

According to the latest Experian Footfall UK National Index, consumers continued to desert the High Street in March, with shopper numbers falling by 1.7% across the UK. Wales and the South West were the worst hit regions, with shopper numbers down 7.13%. Only the North East, South East and East Midlands recorded a rise.

The UK purchasing managers index for the manufacturing sector improved significantly in March from a record low in February, data from economics research group Markit Economics has shown.

The manufacturing PMI lifted to 39.1 in March from 34.9 in February. Analysts had been expecting a marginal rise to 35.0. While the figure is still historically low, it suggests belief that a recovery by early 2010 is possible.

Meanwhile, Chancellor Alistair Darling has gone back on plans to increase business rates by 5% from 1 April. Mr Darling said the rise was linked to the Retail Prices Index last year, but RPI inflation had now fallen to zero. The Chancellor said businesses would face only a 2% rise this year and the remaining 3% would be smoothed out over the following two years.

US Dollar - US Markets

US house prices fell by a record 19% in January compared with a year earlier, according to a closely-watched index. The Standard & Poor’s/Case-Shiller Home Price index records prices in 20 of the largest cities in the US.

The index also showed a month-on-month fall as prices fell 2.8% in January compared with December. Earlier this month, figures showed home construction in February rose by a quarter year-on-year, raising hopes the US housing market may be bottoming out.

Euro – European Markets

Retail sales in Germany unexpectedly fell 0.2% on the month in February from January, according to seasonally adjusted figures released by the Federal Statistics Office. The data is yet another signal that household demand in Europe’s largest economy remains depressed, leaving little hopes for a recovery in the near future.

Further bad news from Spain, as car registrations fell 39% on the year in March, Spanish car manufacturers’ association Anfac has said. In a release, Anfac said 76,503 cars were registered in March, down from 124,702 a year earlier. Car registrations fell by 49% on the year in February and by 42% in January. Not even rapidly decelerating consumer price inflation and falling mortgage payments as a result of European Central Bank rate cuts have been able to stimulate Spanish consumption.

Other Currencies - Highlights

Business confidence among major manufacturers in Japan is at a record low, according to a wide-ranging survey by the Japanese central bank. The quarterly Tankan survey of more than 10,000 companies is closely watched in Japan as a key indicator of the health of the country’s economy. Results released by the Bank of Japan show that business confidence among major manufacturers tumbled dramatically, hitting the lowest level ever recorded.

Elsewhere, business confidence in Poland’s industrial sector held up better than expected in March but remained in sharply negative territory, as new orders remained near record lows while job shedding continued. A survey of 300 industrial companies prepared by Markit showed Polish manufacturing PMI rose to 42.2 in March, from 40.8 in February - its third straight monthly increase and considerably better than the 40.9 figure that had been forecast.

Retail sales growth in the UK almost stalled in February as consumers cut back on spending, figures from the Office of National Statistics show. Sales growth slowed to 0.4% last month, the smallest increase since 1995, after a 3.6% rise in January. Analysts had expected retail sales growth to slow to 2.5%.

Pound Sterling - UK Markets

The UK Treasury has failed to sell all its government bonds in an auction for the first time since 2002. The Debt Management Office has said that the Treasury wanted to sell £1.75bn of 40-year bonds, but investors only bid for £1.63bn of the debt. Analysts said this may reflect concern over the state of the public finances as government borrowing surges.

Meanwhile, the UK February Retail Sales Report has seen the Pound decline against the US Dollar.

US Dollar - US Markets

In a quiet day for US data, Treasury Secretary Timothy Geithner has defended the Dollar as the world reserve currency, a day after China called for it to be replaced. Pointing to the ongoing global financial crisis, China’s Central Bank governor, Zhou Xiaochuan called for a new reserve currency run by the International Monetary Fund.

Euro – European Markets

Following yesterday’s report that showed dire figures about German business confidence, German consumer confidence has declined for the first time in seven months. Workers are increasingly worried about keeping their jobs amid the worst recession since World War II, GfK AG’s confidence index for April shown.

According to the Dutch Central Bureau for Statistics, the Dutch economy shrank 0.6% on the year in the fourth quarter. In line with estimates, the Dutch economy in the fourth quarter contracted 1% from the previous quarter, according to the second estimate, which is a downward revision of 0.1 percentage point compared with the first estimate.

Spanish new housing starts fell 42% last year as a decade-long housing boom went bust, data from the country’s Housing Ministry has shown. Housing starts fell to 360,044 last year, from 615,976 in 2007. The resulting decline in housing investment pushed the wider Spanish economy into recession at the end of last year.

A report from Statistics Denmark has said the Danish seasonally adjusted jobless rate climbed to 2.5% last month from 2.3% in January. The figure, which is in line with forecasts, shows that Denmark’s unemployment rate rose in February for the fifth straight month. Denmark’s jobless rate has climbed steadily since September, when it was 1.7%.

Italian business confidence continued to fall in March, staying at its lowest level since records began in 1991, with recent bankruptcies painting a bleak outlook for the economy and exports, research centre ISAE has said.

ISAE said March business confidence in the Eurozone’s third-largest economy fell to 59.8 from 63.2 in February, well below expectations. A survey of 12 economists polled by Dow Jones Newswires forecast Italian business confidence at 62.7. In the report Thursday, ISAE said sentiment in the consumer goods sector fell to 72.1 from 76.8, while investment goods sentiment slid to 56.5 from 58.7.

Following these somewhat bleak reports, the Euro weakened against its major counterparts, before bouncing back slightly against the Swiss Franc.

Other Currencies - Highlights

The Shekel-US Dollar exchange rate rose 1% in morning inter-bank trading and the Shekel-Euro exchange rate rose 1.68% after the Bank of Israel announced yesterday evening that it would continue to buy US Dollars.

Gordon Brown will repeat calls for greater fiscal stimulus and more financial regulation on a visit to the US as part of his pre-G20 summit tour. The prime minister’s strategies for reviving the economy appear to have been broadly backed by US President Barack Obama. Brown is touring three continents ahead of next week’s G20 summit, calling on governments to back plans for possible further stimulus action.

Pound Sterling - UK Markets

Answering questions from MPs at a Treasury committee meeting, Mervyn King, the governor of the Bank of England, has warned against further significant government spending to stimulate the economy. Given the high levels of UK debt as a result of recent stimulus packages, Mr King questioned the wisdom of increasing debt by spending more.

Following yesterday’s surprise jump in British consumer price inflation to an annual rate of 3.2 percent, Sterling fell against the US Dollar and Euro, giving back some of the previous session’s gains as investors reconsidered the unexpected rise in inflation.

US Dollar - US Markets

Barack Obama has told Americans he sees signs of economic recovery, but has urged them to be patient and look beyond their “short-term interests”. The US president said his draft budget would build a stronger economy which would mean America did not face a repeat crisis in 10 or 20 years. Obama’s $3.6tn budget faces its first tests in Congress this week.

Orders for US durable goods are predicted to have fallen in February for a seventh straight month as the global slump in business spending deepened, economists said before the release of data from the US Commerce Department today.

Bookings for goods meant to last several years decreased 2.5%, according to the median forecast of economists surveyed by Bloomberg News, after dropping 4.5 percent in January. A report on new-home sales, also from the Commerce Department, is anticipated to show sales of new houses declined to the lowest level on record.

Euro – European Markets

Germany’s Munich-based Ifo Institute for Economic Research released a German business confidence survey earlier today. The business confidence index has dropped to a historical low of 82.1 in March from 82.6 in February. The Euro has now gained slightly against its major counterparts.

According to research centre ISAE, Italian consumer confidence fell more-than-expected in March as households’ view of the overall economy and employment opportunities slipped. ISAE said the seasonally adjusted consumer confidence index for Europe’s fourth-largest economy dropped to 99.8 from 104 in February, returning to levels last seen at the end of 2008.

ISAE said consumers’ expectations of their overall economic situation fell sharply to 62.1 from 70.4, while views on rising unemployment increased to 115 from 97. Views on their personal situation dropped to 118.3 from 120.7.

Other Currencies - Highlights

Japan’s exports saw a record plunge in February, falling by nearly half compared with a year earlier, according to the country’s finance ministry. In line with forecasts, exports fell 49.4% year-on-year to 3.526tn yen ($36bn; £24.6bn). This data comes after figures for January showed year-on-year exports nearly halved that month as well.

The South African Rand was softer against the US Dollar in early trade today, moving back into the 9.50s, as some nervousness about global stock markets returned to the markets.

Union leaders from the UK and overseas have put forward a global five-point plan they want G20 leaders to adopt as a way of tackling the economic crisis. The plan includes job creation, some bank nationalisation, tackling wage deflation, and climate change action. The G20 meeting, which will be held in London in early April, brings together leaders from industrial and emerging market countries that make up 85% of the world economy.

Pound Sterling - UK Markets

The CBI has called on the chancellor to use the Budget for ‘confidence building’ measures to boost jobs, investment and competitiveness. The UK’s cumulative deficit for the fiscal year so far is £75.2bn, raising the chance annual government borrowing will exceed its own £77bn forecast. CBI deputy chief John Cridland said the public finance outlook was “alarming”. Last month the CBI predicted that the government will have to borrow £100bn more than anticipated during the recession.

US Dollar - US Markets

Details have been released of a $500bn US Treasury plan to encourage private investors to buy up toxic debts. The ‘Public-Private Investment Programme’ will purchase the troubled mortgages and securities that have been at the root of the credit crisis from banks.
It will initially provide financing for $500bn of toxic assets, with the potential to expand up to $1tn. The plan is due to be formally launched later today.

The US Treasury’s plan to help banks offload their soured loans has promoted broad Dollar-selling and the Pound has hit a one-month high against the greenback. The Dollar is also down further against the Euro.

Euro – European Markets

European Central Bank President Jean-Claude Trichet has said his bank can cut interest rates further but that its deposit rate is already at a very low level. Trichet added it could also use more non-conventional measures to help the troubled banking system. “As regards the future rate of our main refinancing operations, presently at 1.5 percent, I said clearly that we could decrease it again,” Trichet said in an interview with the Wall Street Journal

Other Currencies - Highlights

The New Zealand Dollar has spiked up to new multi-month highs of against the Japanese Yen and the US Dollar during Monday’s early trading. Against the Euro, the Kiwi is now trading near a new multi-week high.

The Australian Dollar too has staged a strong rally against its major opponents on Monday morning. The Aussie jumped to a new multi-month high against the Yen and a 10-week high against its US equivalent. At the time of writing, the Aussie is also advancing towards a multi-day high against the Euro.