In the UK a handful of senior banking executives warned Treasury Minister Mark Hoban that the proposed taxes and regulatory reform could damage the UK banking market unless he made plans to restore the City’s competitiveness. The other topics that were discussed at the meeting were the government’s role in Europe and derivatives, where the clearing of instruments via exchanges is set to become obligatory. Cameron landed in Washington last night on his first official visit, with the intent to put the UK’s relationship with the US on a more formal footing, he said in the Wall Street Journal; “The alliance is not sustained by our historical ties or blind loyalty. This is a partnership of choice that serves our national interests.”

Germany’s Producer Price Index rose to 1.7% this morning, which in comparison to April’s 0.6% growth is an enormous jump, especially when markets were expecting a slow to 0.2%. This has caused the sterling euro rate to hit 1.175 this morning as the news was a clear boost to euro and a German recovery. On Monday Moody downgraded Ireland’s government bond ratings because of the country’s dire public finances, they were downgraded one notch to Aa2 which gives the country’s bonds an AA – rating. This had no effect on euro or other European bond markets.

When Ben Bernanke makes his semi-annual speech on Wednesday it will be his task to reassure the country as the recent bout of weak economic data has affected the dollar rate and the reaction to the recovery. The Fed’s attitude will be one of steady growth and that recovery is still on track, also that the central bank will be ready to act if the economy does stumble and lastly that the Fed is sure it has the tools to avert both inflation and deflation. The most recent weak data news for the US has been that July was the second month in a row that homebuilder sentiment declined, indicating that there is hesitancy over home purchases.

Other than the data we already had out this morning there is only  UK M4 Money Supply at 9:30 and the US Building permits at 13:30, the Bank of Canada are also releasing their interest rate decision at 14:00 which is expected to go up to 0.75% – a move not expected to be copied by the US any time soon.