The continued spread of swine flu has cast a shadow over some better than expected data that came out of the US.

Sterling

Sterling received a boost after unexpectedly strong retail sales prompted a rebound from earlier losses. However, the ongoing concerns about the spread of swine flu kept risk aversion high and limited further gains. Retail sales figures for April showed an increase to +3 from a very negative -44 in March, which was the first positive reading from the Confederation of British Industry in a year and its highest since January 2008.

US Dollar

The dollar lost ground against most of the major currencies as better than expected US housing and consumer confidence data increased investor's appetite for risk. However, the growing concerns about swine flu and the need for more US banks to look for further capital prevented the dollar from being sold off too heavily, as many investors were unwilling to take too many risks at this time.

Euro

The euro strengthened against the dollar as better than expected data in the US led investors to unwind some of their safe-haven trades and purchase the euro. The euro also gained further strength when comments by a senior European Council member, Lorenzo Bini Smaghi, doused expectations that the European Central Bank will adopt a policy of quantitative easing.

Japanese Yen

The yen declined against the euro after reports showed South Korea had a record current-account surplus and New Zealand's exports rose, indicating that there are small signs that the global recession may be easing and as a result investors are willing to sell the yen to purchase riskier assets. However, the yen fared better against the dollar as the continued spread of swine flu kept gains limited.