Risk was back 'on' after better than expected US March retail sales and benign CPI readings were reported at the start of the NY trading day. March US retail sales rose 1.6% (exp. +1.2%) and February retail sales were revised higher (from 0.3% to 0.5%). Core retail sales ex-autos and gasoline also beat expectations, rising +0.7% (exp. +0.6%) and Feb. core retail sales were also revised higher, from +0.9% to +1.1%. March US core CPI ex-food and energy allayed inflation fears with a flat MoM reading, which sent the YoY rate lower to 1.1%. The upbeat data reports provided further evidence that US consumers are steadily emerging from the economic recession and that the recovery is continuing to strengthen.

In line with recent trading patterns, the better data saw the USD sell off, with EUR/USD gaining to a high around 1.3680 from around the 1.3600 level. The USD weakened against other major currencies, even losing ground against the JPY where USD/JPY fell from around 93.50 to a low near 92.80 before recovering to finish near 93.25. Fed Chairman Bernanke delivered an economic update to the Joint Economic Committee and indicated he saw moderate growth, but that the economy faced significant restraints. The Fed's Beige Book also pointed to an ongoing recovery, with 11 of 12 Fed districts reporting economic growth. Stocks and commodities were buoyed by the positive data and relatively upbeat outlooks provided by Bernanke and the Beige Book and the S&P 500 closed at its highest level since September 2008. An unexpected drop in weekly US crude oil inventories sent WTI oil prices higher, gaining nearly $2 to finish out just below $86/bbl. Better than expected 2Q earnings from a major US bank also supported investor confidence.

Ahead in Asian trading, the key data releases include March NZ business PMI and a host of Chinese data reports: 1Q GDP; March retail sales; March industrial production and March PPI/CPI.