A chaotic week for financial markets began last Friday when the United States reported the potentially inflationary news that wages were up by 2.9%, rather more than the 2.1% rise in consumer prices. It put investors to flight, abandoning equities, bonds and higher-risk currencies. The euro might have done better out of the confusion had it not been for Berlin's announcement that Angela Merkel's CDU was ready to form a coalition with the left-leaning SDP. The thought there is that "austerity" will be reined in and that Germany will be more generous to its Euroland fellows, widening the country's budget deficit.

Sterling grabbed a get-out-of-jail-free card when Bank of England governor suggested that interest rates will rise sooner and further than investors had previously been led to believe. It was not enough to prevent the euro gaining a third of a cent against sterling but the single currency was down by two and a third US cents.