Risk traded relatively sideways but the market found a reason to sell the USD nonetheless. Equities slipped about -0.3% in broad terms but bonds were also lower, confounding the direction of risk overall. Gold caught another bid and was resting nearly $8 higher by the $1065 area. The seasonal pattern here is a major risk to out contrarian 4Q gold call. The trend over the last two decades suggests a short-term correction to around $950/940 early in 4Q but then a rally into the end of the year towards the $1150 area.

Better than expected earnings results †both bottom and top line †from Intel saw the buck come under pressure once again ahead of the NY close. EUR/USD trades around 1.4855 as we write and just shy of the fresh 2009 high near 1.4875 hit today. This is the highest the pair has traded since prior to the Lehman Brothers collapse.

USD/CAD plumbed the depths near 1.0270 as the dash to parity continues seemingly unabated. Risk of a near-term correction remains and Canadian Prime Minister Harper has some words of caution with regards to Canadian Dollar strength.  He noted that a ''too rapid'' rise in the currency is a concern. We expect BOC members to also become more vocal as we get closer to the all-important 1.00 mark.

Looking ahead, US retail sales are up tomorrow and the market is looking for the headline to drop a steep -2.1% in September after a robust 2.7% jump the prior month. Most of the decline is expected to come from a massive drop in auto sales as the hangover from the government cash for clunkers program hits. US unit auto sales dropped a massive -41% on the month and will weigh heavily on the headline retail print. Excluding the auto component, the market anticipates a modest 0.2% increase and when you strip out gasoline sales, consensus sits at 0.2% as well.

We see considerable downside risk to the headline number and are looking for a more aggressive -2.7% decline. For retail control - which excludes auto dealers, building materials and gasoline - we think the drop will be somewhere in the -0.2% ballpark. If the number prints more in line with our view, we would expect risk assets to trade lower and the USD to strengthen.