Mixed data kept the major currencies locked within recent trading ranges as markets remain undecided as to whether the worst of the global recession is finally over. Nevertheless, the prevailing mood is one of optimism as strong Chinese data and better-than-expected US corporate earnings figures have served to boost investor confidence.

Sterling

Sterling has made gains against the Japanese yen and the US dollar. There is not much in the way of local economic data that is to be released, so markets will be relying on sterling, holding onto gains that it has already seen so far.

US Dollar

The main focus for this week ahead will be the Federal Reserve's semi-annual testimony, in which all eyes will be focused on Fed. chief Bernanke's speech. Safe haven inflows into the US dollar dried up on Friday and this spurred the US dollar to touch upon one-week lows. Corporate earning reports were seen as a balance of data against industrial output where the decline proved to be at a slowing pace.

Euro

On balance the economic data in the eurozone that was released last week was not too bad as data was better than expected. PMI surveys results are scheduled for release this week and unfortunately, they are forecast to stay in contraction territory, showing signs of stabilising, but not necessarily improving which could cause the single currency to end the week under pressure.

Japanese Yen

Last week we saw the yen and the US dollar head towards their biggest losses in two months, against the euro, as stocks advanced worldwide. Positive equity market movement encompassing a return of risk appetite should combine to keep the yen under selling pressure until the next bout of risk aversion hits.