httpvh://www.youtube.com/watch?v=bZmgXgcxkko

·         Bernanke stays dovish

·         MPC’s Posen – more QE possible

·         European industrial production better than expected

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“Exceptionally low for an extended period.” Ben Bernanke relaxed his recent hawkish turn and fell back into his typical laissez-faire attitude; he might of well have said ‘The buffet’s still open lads, we’ve just made the plates a little bit heavier and we’ll need the back sooner.”

Risky assets moved higher as a result of the Chairman’s testimony to Congress. Equity markets (apart from those in Southern Europe) overcame sluggish starts to finish in the green while bonds fell and EM currencies rose.

Sterling was in fairly lacklustre trade with it losing ground against the euro as European industrial production surprised upwards; a trend we do not see continuing for too long.

Another MPC member, Adam Posen, was speaking yesterday and towed the party line of more QE if necessary. I’m not sure if the MPC is playing games with the market at the moment or why did Posen and King not vote for an expansion at the previous meeting?

I expect sterling to trade within its recent ranges against the majors today ahead of tomorrow’s important GDP figures from the US and UK. Those ranges are 1.1330 to 1.1550 against the euro and 1.53 to 1.5550 against the dollar.

It’s a data heavy day with CBI Distributive Trades from the UK (11.00), European Consumer Confidence (10.00), and initial from the US initial jobless claims (13.30) and house prices (15.00)