European markets have opened the week on a slight bid tone on a more positive climate affected by the two major factors that were driving the market through the previous months.

Bank of Canada left today the benchmark interest rates steady at 0.25 percent in line with estimates, as the Canadian economy is still recovering from recession.

In assuring the importance of political stability on any country’s economy, the market has been driven the past weeks by several political factors and dynamics. On top of the list is the pound, which dropped for a sixth day versus the dollar amid concern U.K. citizens will struggle to elect a government strong enough to reduce the country’s debt.

U.S. Dollar managed to gain ground against its major counterparts after news showing that inflation remains subdued and below the Fed target rate of 2.0% adding to the U.S. reports showing strength in manufacturing and improvements in consumer spending.

China has begun to suffer from the problem that there is too much demand for its manufactured goods. The New York Times reports that there is a major shortage of workers for factories in the People’s Republic.

After increasing predictions that unemployment is improving in the U.S. economy and recording low lying off rates along with lower levels of jobless claims; here appears another blow to this notion that unemployment is improving.

The dollar lost ground on Wednesday, falling from an eight-month high, after Federal Reserve Chairman Ben Bernanke told a congressional committee the U.S. economic recovery is not yet sustainable, and interest rates are likely to remain low for an extended period.

The FOMC raised the discount rate to 0.75% from 0.50%, effective tomorrow. The FOMC noted that the policy outlook is effectively the same as during the January meeting. But it also noted that it will assess whether further discount rate hikes are needed.

Sterling fell on Thursday after Britain’s public finances for January turned out much worse than expected.

The Dollar is rising further after the release of the FOMC minutes. EUR/USD has fallen below 1.3587 to fresh intra-day lows. USD/JPY jumped above 91.00 and currently is testing levels above 91.20.