The markets continue to trade on negative sentiment, following the stimulus plan which was accepted by the Senate, however left investors even more worried about its ability to restore the current deteriorating economy! Asia stocks were down overnight and Europe followed on the same note, amid worries about the economic future.

The EUR/USD plunged during the day yesterday, and a brief rally towards 1.30 again was not strong enough to send the pair higher. Today traders were anticipating the data out of US and the aftermath send dollar higher once again! Next level for now is 1.27 and if that gives way, then we may have further loss for the pair towards 1.2630 and even lower in the coming days. It is quite alarming for the euro bulls that the pair is stalling over 1.30 and cannot sustain gains for too long! Until we see signs that bulls are in control, the downside always prevails!

Today, traders were anticipating the major economic news of the week, which were the retail sales out of US and the numbers rose unexpectedly for the month, however market participants were not celebrating too much as the jobless claims were high once again, emphasizing the state of employment in the country and how much it suffers at the moment. The dollar is getting bid across the board as it is viewed as safer asset to hold for now, and with Euro zone economy deteriorating further as last data suggests and Trichet ready to cut heavily, there is not a lot of incentive to buy the euro and actually hold it for too long.

The pound is also weak against its other counterparts and especially the dollar and again it is quite interesting to see that GBP/USD cannot sustain any moves towards 1.50 and a fast retracement is always under way! The words by King yesterday that UK is in deep recession and the only way for now for BOE is to continue cutting aggressively, suggests that the pound may continue to trade under pressure. We know that traders have already priced in this fact and bad economic conditions in the UK, and therefore one would say that the move may be overdone and a retracement is well needed! However, let’s not forget that talking about zero rates and actually doing it is a whole other ball game and if that occurs in the coming months, we may see pound deteriorating further as other implication may arise by having such low rates!

For now, markets continue to be wary of what the future holds in the global economy and the dollar seems to benefit so far from the current economic conditions! Yen is also another currency that traders seem to go for these days as the risk appetite is not strong enough to make investors bet against the yen! The winner of the current mess seems to be the gold as it has appreciated heavily in the last few weeks and it seems to the preference at times where anything else seem risky and unpredictable..

Let’s see how New York trades and if the euro and pound manage to avoid any breakouts on the downside, which at this moment it seem unavoidable!

Historical Economic Charts

Retail Sales