Risk trades continued to underperform overnight with overseas stock markets following through on the sharp decline in US equities. European bourses were off about -0.5% at last look. Eurozone data continued to come in bleak with construction output slipping -2.2% in December after falling -1.7% the prior month. In a region with such a glut of houses, however, the decline in activity on this front could end up bringing the market back into equilibrium sooner. News regarding European bank exposure to deteriorating Eastern European economies continued to trickle through and weigh on the common currency as well. EUR/USD shed a modest -25 pips towards 1.2580/90 and managed to hold crucial support at the 1.2550 level, for now.
The news out of the UK continued to come in on the very dovish side as well. The Bank of England minutes showed that all members voted for a rate reduction at the last meeting, with Blanchflower only dissenting because he wanted a bigger cut. This coupled with news reports that the UK is in jeopardy of losing its coveted AAA rating on the back of the massive amounts of debt it will need to extend continued to keep the downside in focus for the pound. GBP/USD shed about -70 pips in London trading and was sitting near the 1.42 mark ahead of the NY open. Look to 1.40 as the next critical support zone. Losses should accelerate below there.
Upcoming Economic Data Releases (NY Session) prev est
- 2/18 13:30 GMT CA Wholesale Sales MoM DEC -1.60% -2.50%
- 2/18 13:30 GMT US Import Price Index (MoM) JAN -4.20% -1.50%
- 2/18 13:30 GMT US Housing Starts JAN 550K 530K
- 2/18 13:30 GMT US Building Permits JAN 549K 525K
- 2/18 14:00 GMT US Cleveland Fed's Pianalto Speaks to Developers in Ohio
- 2/18 14:15 GMT US Industrial Production JAN -2.00% -1.40%
- 2/18 14:40 GMT EC ECB's Bini Smaghi Speaks in Berlin
- 2/18 17:30 GMT US Bernanke Speaks on Fed Programs, Balance Sheet
- 2/18 18:20 GMT US Chicago Fed's Evans Speaks on Economic Outlook
- 2/18 19:00 GMT US Minutes of Jan. 28 FOMC Meeting
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