Stock markets rallied on Friday as Ben Bernanke, Chairman of the Federal Reserve, hinted at the end of the global recession. In a speech at the annual Federal Reserve conference Bernanke told the room that “After contracting sharply over the past year, economic activity appears to be levelling out, both in the US and abroad, and the prospects for a return to growth in the near term appear good.”

This saw equity markets spike and risky currencies jump also as the dollar was sold heavily in the afternoon session. The FTSE hit a 10 month high and has now risen 38% since March. Most commentators are predicting further good news for the FTSE as this rally seems to be based on sound economic fundamentals and not simply cheap prices.

Data on Friday also gave risky assets a boost with expansion seen in the German services sector in the month of August while Europe-wide PMIs came close to the magical 50 mark. This led to a strengthening of the euro and, as we have been predicting for a couple of weeks now, GBPEUR has started to fall out of its recent safe trading range. US existing home figures were also much better than expected as sales jumped to 7.2% against a consensus view of 2.3%.

Data today is very quiet and as such we look to equity market moves for indicators. Aussie dollar has strengthened against the pound over the weekend; rare Aussie strength given the weekend’s exploits.

The special report from Friday is live . Watch it; it’s hilarious and if you ever want to see what a Chief Economist and a Head of Trading sound like when fearing for their lives I’d recommend it highly.

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