Consolidation has taken a grip for now in currency markets, though the backdrop of continued risk appetite in stock markets should keep the overall bias of the "safe haven" USD and JPY to the downside against most other currencies. Bernanke's remark at his testimony that a considerable attention on policy exit strategies is not warranted yet perhaps adds to the USD's downside potential. Meanwhile, China's Assistant Minister of Finance Zhu Guangyao said today that he hopes the U.S. ensures the dollar stays basically steady to protect Chinese investments, and that Washington will gradually reduce its fiscal deficit. The comments come ahead next week's China-U.S. Strategic and Economic Dialogue. Market focus today will include BoE minutes from the July 8-9 meeting, which are likely show that some discussion of raising the asset purchase target took place this month (there was market disappointment when the target was kept stable at 125 bln). Any indication of intent to raise the target in August may see GBP come under pressure. The European calendar also includes U.K. July CBI manufacturing orders and Euro-zone May industrial orders. Attention will also remain on incoming corporate earnings (Boeing and Wells Fargo are among key reporters today) and Fed Chairman Bernanke's Senate testimony, Part II. Note that the fate of U.S. lender CIT remains an uncertainty, and so still has potential to rattle markets.
