Mixed economic data kept the flight to safety witnessed overnight firmly in place. US equities shed -1.2% on the day and this helped the US dollar cap a 1.1% rally against the majors. US jobless claims jumped to 480K on the week and this was well above the market's anticipated 465K print. Meanwhile, despite a stronger Philly Fed headline index, the details of the report were less than stellar and coupled with the dreadful NY Empire now suggests a decent pullback in December ISM. In other news, Fed Chairman Bernanke was confirmed by the Senate Banking Committee 16-7.

Euro traded mostly sideways as most of the damage on this front had been done overnight. The pair ranged 1.4305/1.4375 but closed just about where it opened by 1.4330/40. In the short-term, it looks like we need to see a pop back above 1.4420 to shift the focus higher. Cable was the proverbial contrarian trade. It recovered from a session open near 1.6100 to a session high by 1.6180/85 before closing near 1.6150/60. The move there looks more flow driven than anything and someone clearly had an axe to grind on this front.

Gold played catch-up and succumbed to US dollar strength. The precious metal collapsed through $1120 support and never looked back. It is now flirting with a daily up-trendline that comes in near the $1095 zone and a daily close below there would open up potential for a visit to $1070 next. Euro and cable, however, remain well off their session lows now and are not confirming further gold weakness. Ultimately we could be putting in a short-term bottom below $1100, but need to see back above $1110 to confirm.

The Bank of Japan rate decision is now up in the Asia session and the market will be looking for commentary more than any change to rates themselves. The target is expected to remain at 0.1% as far as the eye can see. Headlines with regards to the BoJ's stance on the yen would be market moving, however. Our base case is that this will be a non-event, but traders should keep their eyes peeled for any surprises!