The markets are in a state of ’softly, softly catch the monkey’ at the moment as the ebb and flow of risk appetite gave those backing risky assets on Friday something to smile about.

Bernanke’s testimony, alongside other central bank comments, have been viewed as cautiously optimistic with safe haven demand for the USD and in particular the Japanese Yen falling over the course of the trading day. JPY has also been affected by a shift by Japanese investors into funds that allow investment in high yielding or the so-called commodity currencies.

Earnings season has been good for risky assets however the estimates that these companies have been beating are pretty low; in a human context it’s akin to being able to tie up your shoe laces in some cases. 2 weeks ago the consensus was that the green shoots were withering, these earnings figures are from when they were flourishing and a subsequent decline is to be expected. This is not over.

Data today is a mixture of comment and  economic indicators. German GFK consumer confidence has already been published and it seems like German consumers have started to get their wallets out as the measure rose to 3.5 against a consensus view of  3.0. Improvement was seen in the US housing sector last week and we will be hoping for the same from the New home sales announcement at 15.00. Ben Bernanke’s ‘town hall’ meeting is broadcast in the US today, we know that he is an advocate of strong dollar policy and this has already helped the dollar strengthen and any expansion of the Fed’s plans for the exit from QE will also affect markets.

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