Investors spooked by short-selling ban

Monday night's decision by the German authorities to ban short selling was still sending shockwaves through the markets, sending the Euro to its lowest levels since April 2006 yesterday. The German Chancellor, Angela Merkel, attempted to rally support for the Euro bailout package stating that the "Euro is in danger" and the consequences of failing to act would be "incalculable", nearly sending the Euro off a cliff.
 
The intervention from the Swiss central bank, who bought Euros to cope with a flood for money from Eurozone investors, strengthened the currency dragging it back from the brink, moving from a high of
£/€ 1.1770 to £/€ 1.16 yesterday.
 
Whether this Euro rally proves to be a temporary respite or a change in direction remains to be seen. The ban on specific financial stocks has understandably spooked investors and really begs the question, what do the German authorities know that the market doesn't?
 
In the UK, the Bank of England in its minutes from the May 10th meeting, released yesterday, maintained its belief that inflation would eventually fall back towards the 2% level with a 9-0 unanimous vote in favour of keeping interest rates at 0.5%.
 
The US Federal Open Market Committee (FOMC) realeased the
minutes from their April meeting yesterday which had no real surprises as interest rates remained on hold. The FOMC did re-use
the phrase "rates will remain low for an extended period", making the likelihood of a rise interest rates in the short-term unlikely. Yesterday's US CPI backed up that stance, coming out at a -0.1% for April.
 
The Australian dollar and New Zealand dollar suffered yesterday due to the turmoil in the Eurozone and investors "risk-off" trade, with the Australian dollar and New Zealand dollar both losing over 6 cents to Sterling. The fall against the Aussie dollar meant Sterling reached a 12-week high at £/AUD 1.7368 as the Asian markets closed.
 
Today, UK Retail sales figures for April are released which should give some idea of how much the consumer has been affected by political uncertainty ahead of the general election with expectations for a 0.3% rise month-on-month. Weekly jobless claims, the May Philly Fed PMI and the Conference Board's Leading Indicators Index for April are the main releases coming out of the US.