Concerns over Japan's financial sector brought down the nation's stocks, boosting the USD and JPY on slight risk aversion.

  • The Topix Index, a capitalization weighted index of all companies listed on the First Section of the Tokyo Stock Exchange, fell for a seventh day as companies tapped equity markets to ride out a slump in the world's second-largest economy.
  • The U.S. dollar gained against the euro to $1.4904 and the yen strengthened 0.6% against the 16-nation European currency to 132.91.  As a result gold, a hedge against a decline in the dollar, dropped over $12 dollars after reaching a record $1153.40 an ounce.  Crude oil initially advanced to $80.30 following a report of a drop in oil inventory last week from the U.S. Energy Department.  However, as has been the case in recent weeks, crude oil came under selling pressure after breaching the $80-level and ended the day at $79.58.
  • U.S. Consumer Prices jumped 0.3% for the month of October compared with analysts' expectation for a 0.2% rise.  Overall, prices are down from last year and the inflation outlook remains subdued.  U.S. Home Construction declined 10.6% dragging the nation's stock market down as the data came in much lower than expected.  The government said housing starts declined to their lowest level in six months, weighed down by a sharp fall in construction activity for both single-family and multi-family dwellings, a sign the housing market is still under pressure.

Currency to watch out for: EURUSD & GBPUSD

  • The EURUSD pivot point is at 1.5000 with a preference to enter into short positions at 1.4990
  • The GBPUSD pivot point is at 1.6800 with a preference to enter into short positions at 1.6790

Today's calendar and market movers:

  • UK Retail Sales month on month expected to rise to 0.5%
  • US Initial Claims expected to rise to 505,000
  • US Philadelphia Fed Business index expected to rise to 12
  • EU ECB President Trichet is due to deliver a speech at the Euro50 Group Conference, in Paris.

Stocks: 

  • U.S. equities closed lower on Wednesday, breaking a three-day gain following negative fundamental data in the housing and technology sector.  However, major indexes pared losses as the financial sector outperformed following comments from hedge fund billionaire John Paulson who told investors that he believes Bank of America shares will almost double in the next two years.  At the closing bell the Dow closed -0.1%, the S&P -0.1% and the NASDAQ -0.5%. 
  • As of 07:00 GMT the Nikkei is trading at -1.32% and the Hang Seng at -0.31%