It struggled however to hold onto it's gains in the afternoon due to a surge in the dollar and lower oil prices which is their main problem as to regards inflation.

The dollar's rally in the afternoon was mainly due to encouragingly strong capital net flows which were well above expectations. Mr Bernanke's speech also seemed well received and dealers will hope for some more positive data, with housing starts and the Michigan sentiment which are due later today.

Sterling struggled for much of the day in the wake of Mr King's inflation report of the previous day and dealers seemed to be digesting exactly what was said before taking any large positions. The Aussie had a good day yesterday and remains a very strong currency at the moment. Comments from Mr Stevens the RBA governor highlighted that  price pressures remained at an uncomfortable level and if continued there could be a further hike in rates.

There is little data in Europe ahead of the US releases later today the main release will be the EU trade figure expected to show a downturn at 10.00 UK time.

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