It was a game of 2 halves’ is a common phrase attributed to the more intellectually shady footballers that have graced England’s pitches in the past and I doubt it will not be muttered after tonight’s Champion’s League final. I hate to resort to cliché but that simple phrase is the only way to describe FX markets yesterday.

The market started off looking a bit Il, Kim Jong Il, as news that North Korea tested another 2 missiles capable of hitting Japan sent risk aversion soaring. GBP/USD was dragged down into the 1.57s while EUR/USD lost the 1.40 level it had been occupying over the long weekend. Further missile tests will heighten risk aversion but by a lesser extent each time; should an attack be forthcoming, North Korea attacking someone or vice versa, we would expect that risky assets would slump.

The mood on global markets was somber before the Conference Board Consumer Confidence measure at 14.30 BST. Sentiment rose by the largest amount since 2003 and to a level not seen in 8 months with improvements seen in everything from attitudes to the jobs market to whether those polled would be likely to buy a new car in the next 6 months.

This combined with a strong Case-Shiller House Price Index number saw equity markets rally late in the day with the DJIA rising by 1.8% and the FTSE by 1.5% while GBP/USD closed in on the 1.60 mark and EUR/USD regained the 1.40 level albeit briefly.

Data today is mainly housing market focused with UK mortgage approvals and US existing home sales expected to rise.World First’s Twitter page is up and running and we will be live ‘tweeting’ the impact of all these data releases and how they affect the markets. Click below for up-to-date news on all things currency. The address is http://twitter.com/World_First

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