Expectations are growing stronger for an economic rebound with regards to US industrial production and EU consumer confidence which is increasing support for high-yielding currencies thus weakening the Dollar and the Yen against majority currencies. GBPUSD gained for a third day to highs of 1.6167 as BOE releases inflation report stating that consumer prices will rise at a faster pace which could signal a hike in interest rates sooner than expected, EURUSD climbed to high of 1.3539 and EURJPY to high of 113.38 on optimism that tomorrow's EU consumer confidence would show recovery, USDJPY moved to a high at 83.84 and AUDUSD gained from a two week low trading at 0.9985 as Asian markets gained.
Asian markets gained with the Topix index posted its longest winning streak since August 2009 rising 0.5%, MSCI Asia Pacific index posted gains of 0.2%, Nikkei moving up 0.6%, Hang Seng rising 0.5% and Shanghai Composite rising 0.6% as recovery optimism has been growing although Middle Eastern concerns could dampen the markets. Risk sentiment has been improving, economies remain on track and high-yielding currencies could gain further with sell-offs in safe currencies.
The US industrial production probably gained 0.5% (prev. 0.8%) rising for a third month according to data to be released today while tomorrow's EU consumer confidence improved to -11 (prev. -11.2) due out tomorrow. BOE Governor King is due to speak today on the outlook for inflation and economic growth when the BOE publishes the inflation outlook report after yesterday's inflation data showed increase to 4% which could add pressure to increase rates.
UK releases jobless data, BOE inflation report while US releases producer prices data, housing starts, industrial production and the very important FOMC minutes of last month's meeting where we could expect comments to be in line with Fed's recent comments with focus still on keeping unemployment lower and focusing on the high inflation levels.