The euro and sterling registered steep declines after the European Central Bank said banks in the Eurozone would pay back less than expected on three-year loans while the pound was hammered by Moody's downgrade.

The euro skidded to a six-week low against the dollar after the ECB confirmed that would repay around half the amount expected on loans, underlining concern about how much banks are relying on the central bank.

The single currency fell to a low of $1.3144 and later traded at $1.3183.

Sterling was knocked by a downgrade by Moody's Investors Service on Friday. The UK credit rating was downgraded to Aa1 from Aaa on concern about the medium-term growth outlook for the UK. Moody's outlook on UK credit remains stable.

Sterling fell to $1.5160 from $1.5247 after the downgrade.

Elsewhere the yen fell against the dollar and euro, as focus turned to the Bank of Japan, which looks set to take further monetary policy action to fight deflation.

Meanwhile the dollar made headway against major currencies on Friday. The dollar index, which measures the US currency against six others climbed to 81.454 from 81.377 on Thursday.




CJ

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