[Jason_Lim]

Bernanke's "fundamentally optimistic" comment about the US economy in a speech today reinforced the higher risk appetite theme, already boosted by a 4th consecutive day of equity gains in non-Japan Asia (China composite an 8 month high). Higher equities and metals have helped commodity currencies, AUD up to .7325, not seen since mid October when it was crashing, and USD/CAD at 10 week low, lower than suggested by yield spreads and energy prices. Strategists note that better performance of metals prices than energy in recent weeks is helping CAD, and Thursday's data from China may confirm improvement there, CAD+. Dollar/yen finally broke under 100 after JGB selling squeezed the interest rate spread vs USD, but this should be temporary. Euro/dollar is sideways in thin Easter week trading, still unable to break over 1.3423 resistance after yesterday's stab at 1.3400. There's talk that Euro/dollar should be higher in the positive risk environment, signified by VIX under 40 again today; indeed, Sterling's jump past 1.4900, outperforming Euro, indicates risk+ sentiment. But upcoming news may be tough - PMI's (still at 20-30 year lows in the 30's) and corporate earnings (S&P 500 EPS likely -38% y/y for 1Q). And hence traders are not yet ready to buy Euro/dollar. Indeed, today's retail sales report was weaker than expected, -1.1% headline and -.9% core, and with no silver lining. Euro/dollar dipped to 1.3230 after the report before recovering toward the US open at 1.3260.