Risk Off' As Stock Fall Continues

U.S. Dollar Trading (USD) spent most of the day on the back foot until weak US stocks sent the Dollar rallying against most pairs on renewed risk aversion. December Durable Goods missed at 0.3% vs. 2.0% forecast and Weekly Jobless Claims were at 470k vs. 450k forecast. DJIA -115 points closing at 10120, S&P -12 points closing at 1084 and NASDAQ -42 points closing at 2179. Looking ahead, Q4 GDP forecast at 4.6% vs. 2.2% Q/Q Annualized.

The Euro (EUR) continued to come under pressure as Greece debt returned to focus and EUR/JPY slumped in the US session. The Euro fell decisively through the 1.4000 level later in the day to test support at 1.3950. EUR/GBP rallied off fresh lows as Cable came under pressure on S&P banking downgrade news. Overall the EUR/USD traded with a low of 1.3936 and a high of 1.4054 before closing at 1.3950. Looking ahead, January Inflation forecast at 1.2% vs. 0.9% y/y.

The Japanese Yen (JPY) was weak on short covering in Asia before strength returned in New York on soft US data and safe haven flows. GBP/JPY fell over 2 Yen from Highs and EUR/JPY came close to Y125 supports. December Retail Sales -0.3% vs. 0.2% y/y. Overall the USDJPY traded with a low of 89.32 and a high of 90.57 before closing the day around 89.95 in the New York session. Update December Nationwide CPI at -1.7% vs. -1.9% previously y/y.

The Sterling (GBP) was strong until S&P stated they no longer classify UK among the most stable and low risk banking systems which sent Cable over 100 pips lower. Risk aversion then kept the pair under pressure with GBP/JPY selling constant. Overall the GBP/USD traded with a low of 1.6111 and a high of 1.6279 before closing the day at 1.6130 in the New York session.

The Australian Dollar (AUD) fortunes waxed and waned with investor sentiment with a major rally in Asia reversing quite aggressively in the US session. AUD/JPY was especially volatile as the pair rally off Y80 support to Y81.70 before giving up most of the gains. Overall the AUD/USD traded with a low of 0.8913 and a high of 0.9050 before closing the US session at 0.8925.

Oil & Gold (XAU) broke through support at $1080 only to reverses losses quickly late in the day. Overall trading with a low of USD$1074 and high of USD$1096 before ending the New York session at USD$1085 an ounce. Oil was lower but not as aggressively as the rest of the commodity space. Crude Oil was up -$0.30 ending the New York session at $73.70.