Risk appetite started to improve in yesterday’s US markets (S&P 0.68%) and continued firm into Asia. Asian regional indexes are broadly higher, with the critical and much watched Shanghai composite up 4.52%. The correlations between Shanghai and the EURUSD, USDJPY and Oil remain intact, providing us with some direction in this range bound market. The JPY made some small gains against the USD, trading down to 93.98, while the EUR was relatively unchanged, trading between 1.4200 and 1.4250. The big news yesterday was the BoE minute’s surprise, which showed a 6-3 vote regarding the level of asset purchases. The 3 dissenters included Governor King, along with Messrs Besley and Miles, who wanted a £75bn increase (to £200bn) instead of the passed £50bn. In addition, the minutes revealed the potential adverse consequences of adding another large monetary stimulus might be less severe than the possible costs of acting too cautiously. There seems to be a fear that provided insufficient economic stimulus might have severe economic consequences. Given the tone, we still believe that the door is open for additional asset purchasing in late 2009 and the potential for sterling weakness. During writing, UK retails sales printed higher than expected at 3.3% y/y vs. 2.7% exp. The knee jerk reaction sent the cable higher to 1.6605, but the market quickly reversed its position trading the pair down to 1.6518. And in Europe, ECB Governing Council member Weber said the surprise expansion of German Q2 GDP was mainly the product of stimulus measures and therefore might not be sustainable (similarly to ZEW president Franz comments). Currently risk appetite seems healthy, but in this light economic calendar day and thin volume, a rapid change in sentiment should be expected. Upcoming releases for today: we have Canada Wholesales from the month of June and the US will post its weekly jobless claims, the Philadelphia fed index and natural gas storage.