Risk aversion gripped the market overnight and this was most prevalent in the London session as analysts continue to give the thumbs down to the US stimulus package. European stocks were about -1.5% lower on average and risk appetite in FX waned. Eurozone data did not help matters as industrial production fell to a dismal -12.0% annual run-rate in December after a -8.4% read prior.

EUR/USD was about -75 pips lower and sitting near 1.2850/60 just ahead of NY trading. The 1.28 pivot contained the downside thus far, but below there should see a test of daily trendline support near the 1.2730 level. The yen crosses were lower but dollar strength helped keep USD/JPY relatively unchanged near the 90 mark. EUR/JPY slipped more than -80 points into the 115.80/90 zone. Cable took a beating as Chancellor of the Exchequer Darling said that current forecasts point to a very substantial downturn. GBP/USD sank more than -115 pips and was near 1.4230/40 around the close.

US economic data out in the NY morning will now closely be followed and should help guide risk appetites. Retail sales are expected to slip -0.8% for January after a -2.7% drop the prior month. Also, initial jobless claims are forecast to correct slightly to a still elevated 610K from 626K prior. Look for worse than anticipated results to send stocks lower than what futures are currently suggesting and for lower EUR and JPY crosses to follow. Stay tuned!

Upcoming Economic Data Releases (NY Session) prev est

* 2/12 13:30 GMT US Advance Retail Sales JAN -2.70% -0.70%

* 2/12 13:30 GMT US Retail Sales Less Autos JAN -3.10% -0.30%

* 2/12 13:30 GMT US Initial Jobless Claims 7-Feb 626K 610K

* 2/12 13:30 GMT US Continuing Claims 31-Jan 4788K - -

* 2/12 15:00 GMT US Business Inventories DEC -0.70% -0.60%

* 2/12 18:00 GMT EC ECB's Trichet Speaks in Osnabrueck, Germany

* 2/12 18:30 GMT BE ECB's Gonzalez-Paramo Speaks in Barcelona

* 2/12 21:45 GMT NZ Retail Sales (MoM) DEC 0.00% - -

* 2/12 21:45 GMT NZ Retail Sales Ex-Auto (MoM) DEC 0.30% - -

* 2/12 21:45 GMT NZ Retail Sales Ex Inflation(QoQ) 4Q -0.90% - -