The safe haven Swiss franc continues to benefit as investors remain somewhat nervous over the outlook for the European debt crisis as well as the ongoing debate in the US Congress over raising its debt ceiling. Attention will turn towards UK inflation figures as data is expected to show prices edged higher in the month of April, which will likely keep alive speculation over a rate increase at the central bank of England. Ster­ling could benefit from strong inflation figures. In the eurozone, Ger­man ZEW investor sentiment is expected to pull back from last month’s levels, but not have a lasting impact on currency movements since attention is still placed on developments surrounding the debt crisis.

Sterling

Despite the Bank of England’s view point that high inflation readings are transitory, strong figures will keep alive the debate over the possibility of inflation expectations becoming unanchored. CPI is forecast to rise to 4.2 per cent after a pull back to four per cent in the previous month.

US dollar

The US dollar gave back some of its gains made over the weekend. Economic data was weaker than expected, which did not bode well for broader market sentiment. A New York regional manufacturing survey came in at 11.9, which was down from 21.7 and under expectations of 20. The manufacturing report was the lowest reading in the last five months. The weak release could provide some fresh concerns over the strength of the US economic recovery.

Euro

The euro managed to trade through the sex scandal involving the managing director of the IMF. EU officials as well as IMF members said publicly that the arrest of Dominique Strauss-Kahn in New York over the weekend would not have an impact on negotiations taking place in Brussels. Indeed, the comments ended up being more than superfluous with the news that Portugal would be able to receive a bailout package. The three-year package includes up to €78 billion in an emergency loan programme.

Japanese yen

The Japanese yen continues to remain at comfortable levels against the US dollar suggesting that there is no reason for central bank inter­­vention to help weaken the local currency. The main factor driving the yen continues to be risk aversion trades and appetite is still weak. As a result, more small gains could be seen for the yen.

Travelex Global Business Payments Malta, freephone: 800 733 22, www.travelex.com/mt/

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