Currency Focus

USD - Bernanke's testimony to Congress yesterday was more dovish than expected. Bernanke said that while the conditions for growth are still favourable, there are signs that inflation pressures continue to ease and added that though there have been signs of stabilization in the housing market there are still risks that the correction in the housing market could be greater than expected and thereby affect consumer spending. Fed Chairman Ben Bernanke told Congress that inflationary pressures had 'abated somewhat' whilst growth was returning to a more sustainable pace.

GBP - The sharp falling-back in retail sales in January and a fall in the deflator ease pressure on the Bank of England to raise interest rates again in the very near term and dilute the chances of a hike in March. In UK the news wasn't nearly as sunny as in Japan as Retail Sales recorded the worst drop in 4 years falling -1.8% vs. 0.2% expected. The biggest decline was in clothing and electronics sectors and that news along with the fact the RICS housing survey also printed below consensus, clearly curtails any bullish expectation that BOE will tighten any time soon.