Markets Staying in Range As Sentiments Stabilized

Markets are stuck in range as sentiments stabilized in Asian session today. Fed Chairman Bernanke said yesterday that economic recovery in US still lacks sustainable strength. Bernanke remained cautious on the economic outlook, citing consumer spending, currently taking up 70% of the US GDP, is not robust enough to sustain growth. He stated that "every country needs to have an appropriate balance of consumption, capital formation, exports and government spending, and that's an important task for us going forward... In terms of debt and consumption and so on, we're still way low relative to the patterns before the crisis'.

On the other hand, St Louis Fed President Bullard stated that the current situation warrant to change the central bank's policy. He stated that 'as the U.S. economy continues to rebound and repair', further easing 'may create an over-commitment to ultra-easy monetary policy' and 'it may be a good time to take stock of whether we may be at a turning point'.

Dallas Fed Fisher said that the economy is now in "much better shape than before". The know inflation hawk acknowledged that inflation is not the major issue and the challenges are "jobs creation and prosperity." He doesn't not support another round of quantitative easing. Fisher noted that "the money that is already out there is not being put to use". Rather, Fisher urged "better fiscal policy" to complement Fed's monetary policy.

Chicago Fed Evans said that the unemployment at 8.3% is "substantially above reasonable measures of the natural rate." Underlying inflation measures are projected to be below Fed's 2% objective "for a number of years". And hence, "more accommodation would be appropriate." And he expects that by the end of 2014, unemployment could remain relatively higher and thus, Fed might indeed leave rate near zero beyond end of 2014.

The economic data is relatively light today. Main focus will be on Canadian CPI, which is expected to rise to 2.7% yoy in February while core CPI is expected to rise to 2.2% yoy. US new home sales is expected to rise to 325k annual rate in February.