Despite the lack of local data releases, there was evidence of improved market sentiment from the outset. The Federal Reserve Beige Book report was also released and has contributed to a more positive tone. The report showed moderate economic expansion in all 12 districts, but highlighted concerns over higher energy prices. Elsewhere, economic data released in helped lift sentiment and the Australian dollar.

Investors continue to regard sterling as an alternative ‘safe haven’ as concerns over ’s finances continue to weigh on euro sentiment. RICS house price data and the BRC retail sales report showed signs of improvement, pushing the Sterling index to 14-month highs.

US dollar

In the , the Federal Reserve’s Beige Book report showed growth in all 12 districts to be moderate to modest. The survey on growth and inflation was in line with market expectations and supports the view that the Fed will remain in ‘wait and see’ mode.

Euro

European Central Bank member Benoît Cœuré reminded markets that the central bank still had its Securities Markets Programme helping ease selling pressure on the single currency. This facility has bought government debt in the past and his reminder of the programme was enough to ease tensions in the Spanish debt market where yields have been on the rise.

Japanese yen

The yen has fallen from its six-week highs against the US dollar, one month highs against sterling and seven-week highs against the euro. Improved investor sentiment is driving the yen lower. The Governor of the central bank said that financial markets are stable, but that the European debt crisis could threaten the outlook for the Japanese economy.