The euro slumped to a 4 year low against the US dollar yesterday. News that Germany had placed a temporary ban on naked short selling and credit default swaps, effectively high risk bets that the prices of stocks and bonds will fall, saw the euro lose ground. At one stage, the single currency was mired at its lowest level against the US dollar since April 2006.


Sterling fared little better on the exchanges yesterday, as the initial rally following the sharp rise in inflation during April eventually receded. Ultimately it would seem that most investors believe that the unexpected rise will have no impact on the Bank of England’s monetary policy and that interest rates will remain low in the UK for some time to come.


The greenback was once again the best placed currency to benefit from the uncertainty and looks set to begin Wednesday’s session from a position of strength against all the other major currencies.


Data due out today will be dominated by the Central Banks with minutes of the latest round of policy meetings expected from both the Bank of England and the US Federal Reserve. Given that both meetings resulted in no policy changes, the devil will most likely be in the detail as traders will look for insights on both the economic outlook and any future plans to shift policy.


• United States
CPI (Apr)
Real Weekly Earnings (Apr)

• Japan
GDP (Q1)