Aussie dollar weakens on increased risk appetite

The Australian dollar weakened against sterling over the weekend, after comments from US senate banking committee chairman Christopher Dodd that it may be necessary to nationalise some US banks for a short period. This lead to a increase in risk apetite as investors took this as suggestion that the US government would not allow another bank to fail. Meanwhile data on Friday revealed an unexpected rise in British retail sales for January compared with the previous month, as shoppers took advantage of post Christmas sales. Although this provided some support for the pound it was largely overshadowed by downbeat European data, which is likely to continue to be a drag on the UK economy.