Yesterday was a day of positioning. In the moments before a storm ships are brought into harbour, hatches are battened down and tales are told of the last time a squall this big blew through this town. In financial markets this was characterised by market participants becoming aware of their surroundings and what outcome will be born of particular circumstances.

FX markets will be driven by equity markets over the coming sessions; data, unless particularly forward looking, will not be able to stem the tide should the levees surrounding risky assets break. As we said last week it’ll be the major corporations and the financials that are the ones to watch: Goldman, Bank of America, Citibank, GE and AIG would have 2 years ago made up a safe yet dynamic portfolio. Now they are, maybe Goldman excepted, dogs of the mangiest coat. A fairly bearish pricing season has already been priced in however traders will use any excuse at the moment to push USD and JPY into stronger positions at the expense of riskier assets.

We have had a rally overnight with banking interests in particular higher after Merideth Whitney, a prominent banking analyst, upgraded a couple of stocks. Natural resource shares were also higher as commodity prices halted their recent declines and oil stabilised.

The data calendar is busy today. RICS House Prices and BRC have already supported GBP overnight (House price balance improving to -18.1 from -43.8, the best reading since September 2007 and retail sales up 1.4%). UK inflation figures are due at 09.30 which we hope to be broadly supportive. European ZEW should be weak while retail sales from the UK are expected at 0.5%.

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