US growth trends and a renewed interest in carry trades were the dominant factors during the week.

The ISM index for the manufacturing sector remained subdued with a reading of 50.9 in March from 52.3 the previous month while the reading for the services sector also weakened to a 12-month low of 52.4, although the unadjusted data was stronger over the month. Factory orders secured a weak 1.0% monthly recovery.

The prices index, however, recorded a significant increase over the month in both surveys which maintained inflation concerns

The ADP employment report registered a 106,000 increase in employment for March which maintained expectations of steady growth in the monthly payroll report while reported job cuts also fell over the month.

There was a sharp 3.9% increase in factory orders and a 0.9% increase in production which reinforced confidence over the German economy.

ECB officials continued to take a tough stance on interest rates during the month with further warnings that they would act to control inflation if required with markets still expecting an increase in rates during the second quarter.

The dollar found some support close to 1.3380 against the Euro, but was unable to make significant headway and weakened to lows around 1.34 in US trading on Thursday.

The headline Japanese Tankan index fell to 23 in the March quarter from 25 previously. The other components were also generally slightly weaker, although capital investment plans held firm.

There was renewed interest in carry trades during the week with risk aversion levels falling. According to one measure, investors were more confident than at any time in the past 18 months which helped trigger capital outflows from Japan. There were also capital outflows at the beginning of the new fiscal year.

The Bank of Japan continued to suggest that it raise interest rates only slowly and there was evidence of a renewed capital outflows at the start of the new fiscal year.

Renewed interest in carry trades weakened the yen with the Swiss currency also being subjected to selling pressure. The yen came weakened to 119.0 against the dollar and near 159.0 against the Euro.

The Bank of England left interest rates un changed at 5.25% following the latest MPC meeting and this decision pushed Sterling weaker.

The CIPS index for the manufacturing sector held firm at 54.4 although this was lower than the 55.4 recorded the previous month. The services-sector index strengthened slightly in March while the inflation readings remained firm with the prices component at a 7-month high

The UK currency gained support from a renewed interest in carry trades over the week with expectations of higher interest rates increasing Sterling's attractiveness.

Sterling pushed to a 2-month high above 1.98 against the dollar before retreating towards 1.97 with the UK currency unable to break 0.6750 against the Euro and dipping to 0.6805 against the Euro.

The Australian Reserve Bank left interest rates on hold at 6.25% at the latest monthly meeting. The futures markets priced in the chances of a rate increase at around 50% for the May meeting as confidence over the economy was sustained.

The Australian dollar strengthened to highs near 0.82 against the US currency ahead of the interest rate decision and, despite a temporary retreat, the currency regained ground with a further challenge on the 0.82 level on Thursday as commodity prices remained strong.

Have a great day and a wonderful weekend.