Poor economic data across the pond saw a return to risk aversion in the marketplace and the USD was the beneficiary in FX land. The Confederation of British Industry's monthly survey of UK retailers showed a decline in the expected sales for February to -52, from -49 in January and -40 in December. Meanwhile, data out of the eurozone still showed no signs of marked improvement. French consumer confidence was better than expected though a still bleak -3.9 in January. German import prices sank to a -5.1% annual run-rate from a previous -1.3% pace - this will leave the hawks on the ECB hard-pressed to argue about inflation.
The German IFO business climate index improved to a better than expected 83.0 in January from 82.7 the prior month - but a 0.3 point increase is hardly anything to write home about. Perhaps the worst piece of news came in the eurozone current account which fell to the lowest on record at -16.0B for November (data back to 1997). European bourses were down about -1.5% on average and currency risk trades were commensurately weaker.
EUR/USD shed more than -80 pips and was sitting near the 1.3160/70 zone ahead of the start to NY trading. The 1.3150 level looks like the next critical support area and we would target a potential move towards 1.3090/80 if through there. Resistance lurks just above the 1.32 level. The JPY crosses saw a sharp reversal on weaker equity marts as well. USD/JPY sank more than -80 points to 89.10/20 while the drop in EUR/JPY was a more pronounced -190 pips into the 117.30/40 area. USD/CAD jumped about 90 pips towards the 1.2280/90 area as oil prices corrected about -$2 to around $44.50/bbl.
Economic data and more 4Q corporate earnings reports out of the US will once again highlight the NY session. The S&P Case-Shiller home price index is expected to deteriorate further to -18.4% from -18.0%, though this November number is likely baked in the market. Consumer confidence will be important in terms of the jobs component as it will give a good indication to just how high the unemployment rate will go this month. Stay tuned for another volatile trading session!
Upcoming Economic Data Releases (NY Session) prev est
* 1/27 14:00 GMT US S&P/CS Composite-20 YoY NOV -18.04% -18.40%
* 1/27 15:00 GMT US Consumer Confidence JAN 38 39.1
* 1/27 15:00 GMT US Richmond Fed Manufact. Index JAN -55 -50
* 1/27 22:00 GMT US ABC Consumer Confidence 25-Jan -53 - -