Currency markets had their most volatile session for a long time yesterday with support and resistance levels being tested. The release of weak US industrial production data for January following weak US December Net International Capital Flows ( TICS ) sent the US dollar lower with forex traders scrambling to cover weak long positions. Then Mr Bernanke started his testimony, with comments that suggested a robust economy and that ’some’ interest rates might be needed to keep the economy in check. The US dollar immediately clawed back its losses against the Euro, Swiss Franc and Japanese Yen, but less so against the British Pound which is suffering from the rather ’laissez faire’ attitude of the Bank of England quarterly inflation report. Asian fx markets had a quiet session with the only event of note to forex traders, was a comment by Bank of Japan ( BoJ ) Policy Board member Mr. Nishimura which weighed on the Japanese Yen by stating that even if Japan’s quantitative easing policy was replaced, there would be no need for an interest rate increase from the present 0.00% anytime in the near future.

Forex markets this morning should be quiet with the only expected economic release being UK retail sales which are expected weak. The main event will be Mr Bernanke’s continued testimony to the Senate this afternoon with the possibility of volatility if there is so much as a comma out of place.