Yesterday on a whole saw a calmer day on financial markets and with the major currencies, though still somewhat choppy, remain well within familiar ranges. Overall, markets continue to look ahead to Friday’s speech by Fed Chairman, Ben Bernanke with speculation about whether or not he will use the opportunity to raise the prospect of further quantitative easing.

While, against this background, there is a reluctance to place large bets, the dollar initially had a somewhat weaker tone yesterday, with the main gainers commodity currencies such as the Australian and New Zealand dollars. While these gains were largely reversed in later trading, these two have regained their stronger tone overnight after better than expected Chinese data.

The euro also initially traded higher against the dollar, with the help of a better tone to stock markets before the dollar recovered most of its losses with doubts as to whether Bernanke will signal more QE. The euro is also looking ahead to today’s eurozone PMI data which could well emphasise the weakening in the region’s economy.

Meanwhile, yesterday saw the Swiss National Bank again intervening in the forwards market in an attempt to drive the CHF lower. Markets also remain wary that the Japanese authorities might intervene to weaken the yen. Sterling was also relatively steady yesterday. It has been attracting some safe haven support which might otherwise have flowed into the CHF or yen as it is seen as being in a better fiscal position than the eurozone. However, upside is limited by wariness that data such as today’s CBI industrial orders will highlight the fragility of the UK economy.