Daily currency report

With markets still digesting Germany's unilateral decision to ban the "naked" short-selling of certain types of stocks and bonds, the euro paradoxically rallied on the back of rumours that the Swiss National Bank (SNB) had intervened in currency markets. The rumours then escalated as traders began to speculate that the European Central Bank may follow suite and move to arrest the single currency's decline against the dollar. Neither the SNB nor the ECB commented on these rumours, but they were enough to help the euro pull back from its four-year low against the dollar and encouraged profit taking among investors. Elsewhere, the sterling ended the day slightly up against the US dollar, but slightly down against the euro.

Sterling

Sterling ended the day slightly up against the US dollar, bringing to an end five consecutive sessions of decline. The move had little to do with sterling strength, however, but was rather a consequence of the euro bounce. As a result, sterling actually lost ground against the single currency.

US dollar

The dollar eased back across the board as the rumours of central bank intervention proved to be enough to persuade investors to take profit on the greenback's recent rally.

Euro

Germany has won few friends with its decision to unilaterally ban the "naked "short selling of sovereign debt bonds, credit default swaps and certain German banking stocks. At heart, the move was intended to prevent what Germany regards as dangerous and harmful speculation by market players who have been effectively betting against nations by selling assets they don't actually possess. Chancellor, Angela Merkel, has said the move was taken to protect the European Monetary Union. Given that the decision was taken without first speaking to other member states, some commentators feel that the decision has done more harm than good. Against all the odds, however, the euro actually rallied as rumours that the SNB, Federal Reserve and the ECB had all intervened in markets, gained momentum.

Japanese yen

The yen enjoyed another strong session as Q1 GDP data showed that the economy grew by 1.2 per cent, taking the annualised rate of growth to 4.9 per cent.