What a difference a day makes. The markets have easily shrugged off downbeat comments from Ben Bernanke on Wednesday, and the accompanying disappointment that the Fed Chair would not introduce new forms of accommodative measures, to respond with a strong resurgence in risk appetite, with global equities and currencies rallying sharply against the buck. The Pound now looks like it wants to retest 1.550 figure, while UK equities are set for a promising day. All eyes now turn to the highly anticipated European bank stress test results due later today. Although some have attributed the recent gains in the Euro to the fact that the stress tests results have already been priced in as net bullish, there is certainly always the risk for some disappointment or negative reaction to the actual results. Many analysts are concerned that the standards of the tests will be too lax and thereby discredit the tests, which ultimately could once again weigh on the Euro.
Joel Kruger, Currency Strategist, Daily FX
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