Daily currency report

The euro slumped to a four-year low against the US dollar as news emerged that Germany had placed a temporary ban on naked short selling and credit default swaps. Sterling fared little better on the exchanges, as the initial rally following the sharp rise in inflation during April eventually receded. The greenback was once again the best placed currency to benefit from the uncertainty and is in a position of strength against all the other major currencies.

Sterling

Sterling continues to trade within recent ranges against a weak euro, but came under renewed pressure versus the US dollar as the scale of the problems facing the British economy was brought sharply into focus. Official data showed that inflation rose by 0.6 per cent in April, taking the rate on an annualised basis to 3.7 per cent.

US dollar

Once again a strong session saw the greenback post yet another series of highs against both sterling and the euro. The US dollar continues to garner support from across all markets both on the back of its safe haven currency status and data that continues to point to an economy in full recovery mode.

Euro

The euro was heavily sold off across the board as German authorities moved to implement a ban on naked short-selling. Policymakers in Europe's largest economy have long been vocal in their criticism of a practice that it sees as destabilising financial markets and betting against European assets. The ban will apply to eurozone sovereign bonds and credit default swaps as well as some blue chip stocks.

Japanese yen

Just like the US dollar, the Japanese yen soared against the euro as markets responded to the German decision to ban short selling. The yen also drew support as capacity utilisation and industrial output figures for March both showed marked improvements.