The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

 
Stock markets were reaching higher yesterday, but it wasn’t exactly plain sailing.

US new home sales came in below expected levels and markets looked set to sell off on another round of bad news.

However Fed chairman Ben Bernanke provided some cheer with his testimony before congress. In this testimony, he hinted that US interest rates would be unlikely to rise in the near future.

After the Fed upped the discount rate, there had been some speculation that a general interest rate hike would be coming sooner than previously expected, but these thoughts have been pushed to the sidelines now.

On the forex markets, the US Dollar sold off along with the Yen, yet the British Pound was still struggling.

Analysts and economists are divided over what the UK should do about its budget deficit at a time when the economy is still in dire need of help.

In addition, the latest political polls continue to show a narrowing in the prospects for the two main parties. More than anything, markets hate indecision and a hung parliament would certainly be cause for concern for traders.

This is perhaps best seen in the EUR/GBP, which was the top rising currency pair of yesterday, indicating strength in the Euro over the Pound.

This morning, yesterday’s optimism appears to have been short lived with markets taking a turn for the worse.

Speculation that Greek debt will be downgraded again has caused a renewed flight to safety.

As discussed over the last few days, the Yen appears to be the currency of choice for that right now. Indeed both the Euro and the British Pound have fallen heavily against the Yen with the EUR/JPY posting its lowest levels for over 12 months.

To top off today’s early moves, we’ve got an exceptionally busy economic calendar ahead.

Highlights include Bank of England governor King speaking at 09.30 GMT.

US durable goods orders and unemployment claims are at 13.30 and more from Fed chairman Ben Bernanke comes at 14.00.

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