February 16, 2010 05:45 PM

Risk appetite came back to the fore in NY trading and US equities and the commodity complex were bid in size. Stocks jumped nearly 2% in broad terms after the long holiday weekend and this sent the yen crosses into some fresh intraday highs. EUR/JPY rallied hard from an open near 122.50 to just shy of the 124.50 zone. The 123.80 area now looks like important support and a spill below should see the downside come back in focus. USD/JPY also popped from a session open near 89.90 to a high near 90.50 in swift fashion. Stops were trigged above 90.30 and the pair eventually ran out steam as we neared the close.

Speaking of stops being triggered, EUR/USD moved in what looked to be a classic (and painful) short-squeeze. European names were noted buyers by 1.3650 and an option also expired near that area today. The pair would never look back despite no resolution to the Greek debt problems and traded into 1.3770 highs. There is talk that there is a good amount of stops staggered between 1.3850/70. While still a ways away, we cannot rule out another short-squeeze into this zone overnight. Look for a good barrier in that stop loss area on the follow.

US economic data was deceiving to say the least. While headlines were better than expected, the details of today's reports left a lot to be desired. The NY Empire manufacturing index jumped to 24.9 from 15.9 in the latest month but the guts showed a concerning decline in both new orders and shipments. The one bright spot was a modest increase in the employment component. The NAHB (homebuilder) index was also better on the surface, printing 17 in February after a 15 read previously. However, the most pertinent indicator, buyer traffic, was stagnant at a reading of 12 - below the six-month average of 13.