Markets continued running towards risky assets yesterday, extending the gains made over the last week as data and business news gave reason for optimism. Sterling, euro and the commodity currencies basked in glory over the day as the momentum they have built recently continued to carry them higher, while predictably the dollar and yen were the main losers for Monday.

Nationwide housing figures gave UK homeowners and lenders reason to believe the continued erosion of house values may have finally ended, revealing a 0.6% rise in prices for last month, opposed to consensus view of a 0.4% decline.

News stateside sparked optimism as troubled lender CIT was handed a last minute reprieve from bankruptcy, its existing bondholders extending a lifeline in the form of an extra $3bn of capital. After months of straight losses, they are hoping that it will be enough to secure the future of the finance company. One hopes they aren’t pouring good money after bad, as the Fed has already decided that CIT is not worth saving. Leading indicators also came out with a pleasing figure of 0.7%, surpassing consensus of 0.5% and helping the S&P return to levels not seen since November 2008.

Reports that the German government is considering a US based TARP package to support its banking sector helped support the euro higher, while Conservative leader David Cameron also admitted fondness for shadowing a US idea. He proposed massive regulatory overhauls similar to those that Obama is considering, scrapping the Financial Services Authority (FSA), and handing greater power to the Bank of England.

Data today is sparse with only public borrowing figures from the UK to sift through, while the Bank of Canada is undertaking a rate decision in the afternoon. Given the lack of data that will be evident, we will continue to focus on the sentiment that equities provide, but considering the run that GBP and risky assets have had recently it would not be surprising to see at least a moderation of the risk appetite theme for today.

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