Investors' are up and about their sentiment recovered slightly and as shown by their longs on the USD/JPY; risk appetite is back especially after news of securing any tightened liquidity for bond insurers subsiding fears of second round effects and new wide renewed sell-offs. Attempts to stabilize financial markets seem to be on track as their focus is now once more revolving economic fundamentals, rationalizing appropriate monetary policy headings by central bank, to reflect accordingly comprehendible exchange rates.

The European session is again dominated by news from the United Kingdom, especially those directly from the BoE; Mervin King gave out the final word to markets as the February Inflation reported reflected higher inflationary risks from the November projections, providing a more hawkish stance markets now do not expect much easing by the BoE as implied market rates were to 4.5% by year end and now are more to 4.75%; moreover a March rate cut is now a very slight probability, that and stronger the expected labor data empowered sterling to continue to the upside. Breaching the first level around 1.9570s provided the pound with the momentum to head to attempt breaching the next levels at 1.9650s; the pair achieved the high at 1.9654 yet fell once more back to trade now near 1.9630s. Against the Japanese yen investors are back to bet selling the yen for higher return the GBPJPY recorded a high of 211.45 approaching very strong resistance levels, continuing to the upside will allow the pound to attempt the 212s once more.

The 15 nation star is also on the rise, especially as expectations of weak retail sales form the US later today are weakening the dollar; the euro rebounded from its early lows at 1.4536 providing it with momentum to incline further reaching the strong resistance levels ahead setting the high at 1.4597 breaching those levels might put the euro above the 1.46s level once again, while it trades currently around 1.4580s.

The Japanese yen is still weakening against the dollar, especially as we see risk is back in the market; the pair head to the upside to close above the strong levels at 107.50s which extends upside targets; the high was set at 107.63 after acquiring momentum from heading to the downside in early hours to as low as 106.98 as those levels provide good demand on the pair setting the bullish rise. The US session will have more to come especially with sales data that provide the extent of slowing consumption in the US especially that they dropped in the holiday season they are expected to have continued weakening in January as well.