The dollar also hit lows against a basket of currencies after reports showing consumer sentiment came in lower than expected and surprisingly comments by the Feds reinforced views that the central bank will keep cutting rates. This has helped revive risk appetite, prompting investors to purchase high yielding currencies and others dumping the dollar.

Fed vice chairman Donald Kohn stated yesterday that the turmoil in financial and housing sectors has spread into other sectors of the economy while increasing energy prices accompanied by rising food costs may boost inflation. Given the increased risks that the US economy is facing, the Fed is highly expected to lower interest rates and to revive growth and thus ignore inflationary pressure. This comment pushed the dollar to hit an all time low against major currencies offering more proof the economy may be in recession.

The stronger than expected IFO survey accompanied by strong EU data and with the high crude oil prices lowered expectations that the European central bank will cut rates to deal with the slowdown of growth in the euro area. Given the everlasting weak dollar and the comments mentioned above from the Fed's vice persistent, the euro reached an new all time high of 1.5056 and a low of 1.4981.

The British pound showed mixed trading against its major counterparts yesterday, yet today the risk appetite was boosted by comments by the Feds increasing carry trades and driving investors to transfer funds into riskier yields in the hope of a promising return. This in hand pushed the pair to the upside to record a high of 1.9947 and a low of 1.9843.

Meanwhile, the yen is inclining on the back of a weak dollar as investors are waiting for comments by Mr. Bernanke pushing the pair to the downside to record a low of 106.80 after recording a high of 107.38