I have decided to include more of the world stock market indices this week, as my blog is starting to get read more and more across the world by people from the UK, Europe, America, Australasia and the Far East.

Notably this week is the fall in the value of the Yen against Sterling and the US Dollar, falling by over 4% against UK Sterling and by 2.5% against the Dollar. However, the US Dollar has suffered too this week and slid against Sterling by 1.6% ending close to $1.50 to the Pound for the first time in a while.

The reason for the weakening Dollar is due to the US economy contracting by more than expected at 6.1% in Q1 2009. Investors are focusing on a rise in private consumption for the first time since Q2 of 2008 combined with a sharp decline in private inventories.

In the short-run falling inventories hurt an economy and at a point where inventories have reached their optimal levels, companies will need to increase production to meet demand, as economies pick up again.

Due to the falling pace in contraction in the US economy The Federal Reserve is refraining from new stimulus announcements.

UK Sterling rose this week on comments by UK Chancellor Alistair Darling that he expects a UK economy to recover by the end of the year.
End of the week saw:
Stock exchanges:
FTSE 100: 4,243.22 GBX
FTSE 250: 7,571.33 GBP
UK All Share: 20,647.03 ZAX
US DOW: 8,212.41 USD
US S&P: 877.52 USD
US NASDAQ: 1,719.20 USD
Japan Nikkei: 8,977.37 JPY
China H Seng: 15,520.99
Australian ASX 200: 3,769.60 AUD
German DAX: 4,769.45 EUR
French CAC 40: 3159.85 EUR
Spanish Ibex 35: 9,038 EUR

Currencies
UK Sterling £ to US Dollar $ 1.49089
UK Sterling £ to Euro € 1.12313
UK Sterling £ to Japanese Yen 147.906
UK Sterling £ to Aus $ 2.03507
US Dollar $ to Euro € 0.753325
US Dollar $ to Japanese Yen 99.2063
US Dollar $ to Aus $ 1.36500

Commodities
Nymex Crude oil – $52.65
Gold – $887.90

The pound has fallen to two-and-half-year low against the US dollar and record low against the euro amid fears about the health of the UK economy.

Sterling fell as low as $1.7850, and was trading at 81.62 pence per euro.

Measured against a basket of currencies used by major trading partners, the pound is now at a 12-year low.

Sterling has fallen sharply over the past month – in mid-July one pound bought two dollars – as fears increased the UK was heading for a recession.

At the same time, the dollar has been helped by a fall in the price oil.

Difficult outlook

The US currency has been gaining ground in recent weeks and on Tuesday the euro fell to a seven-month low versus the dollar, dipping below $1.45.

Falling oil prices, which hit a five-month low on Tuesday, have been a factor behind the dollar’s rally.

Investors had bought commodities to protect against the dollar’s weakness earlier this year but are now unwinding those positions – to the US currency’s benefit.

Analysts also said the dollar was strengthening because the US economic outlook appeared better than the deteriorating picture in the UK and the eurozone economies.

“It is difficult to see an improvement in sentiment in the UK in the very near term,” said analysts at Barclays Capital.

Gloomy comments over the weekend from UK Chancellor Alistair Darling, who warned that Britain was facing its toughest economic challenge for 60 years, triggered sterling’s plunge on Monday.

Weak mortgage approval data added to the dark mood.

News reported by The BBC