The big focus during the North American session today is Federal Reserve Chairman Ben Bernanke's semi-annual testimony on the U.S. economy and monetary policy. Based on his introductory comments, it doesn't sound like Bernanke is convinced that the central bank needs to start tapering off asset purchases. However at the same time, he also didn't dismiss the idea outright, which may be been enough to keep the dollar bid on day with very strong economic data. Bernanke started his testimony saying that the benefits of easing outweigh the costs but went on to add that the Fed has the tools to tighten monetary policy and more QE may erode confidence in the Fed's ability to exit. Concern about unwinding asset purchases is the main motivation behind the calls to phase out asset purchases and it appears that in some ways, Bernanke shares this view. However with job market remaining "generally weak" and inflation well anchored, the Fed Chairman isn't in a rush to talk about exit strategies and instead confirmed that they intend to sustain easing for as long as needed. Economic growth is picking up this year but he is worried that the Sequestration could cause significant economic burden and for this reason, the well-mannered dove does not want to rush to any conclusion.

So far, Bernanke is neither supporting the idea of ending Quantitative Easing or defending it vigorously, which for the time being is keeping the dollar bid against all currencies except for the Japanese Yen. There is still a Q&A session that will most likely go to lunchtime so keep an eye on the headlines for any further clarity on his stance.

Meanwhile this morning's U.S. economic reports should ease some of Bernanke's concerns about the economy and make those members of the FOMC who support tapering off asset purchases more confident in their views. Consumer confidence soared and new home sales rose by its largest amount since April 1993. The Conference Board's consumer confidence index hit 69.6 in the month of February, up from 58.6. Improvements in the labor market and rise in equity market valuations made investors more optimistic about present and future conditions and this uptick is consistent other sentiment reports. The housing market is also gaining momentum according to the Commerce Department who reported a 15.6% increase in new home sales. This was the biggest increase in nearly 2 decades and brought the total amount of new homes sold to its highest level since 2008. The only problem is that the average price of a home sold dropped 5% but at least these homes are remaining on the market for a shorter period of time. There is definitely signs of increasing momentum in the housing market and this along with the rise in consumer confidence and manufacturing conditions in the Richmond region will sit well with the central bank.