• USD: Higher, supported by safe haven flows, no major US economic data released today
  • JPY: Lower , Japan posts first trade deficit in 13 years, corporate bankruptcies rise
  • EUR: Lower, consumer sentiment falls to record low, downside limited by gains in cross to GBP
  • GBP: Lower , pressured by falling UK bank stocks and BOE quantitative ease
  • CHF: Lower, pressured by rising Swiss unemployment, SNB monetary policy decision Thursday
  • CAD and AUD: AUD & CAD lower, pressured by risk aversion, Canadian housing starts drop sharply

Overview

USD traded higher supported by a fresh spike in risk aversion as global equity markets fall on concern about UK bank troubles. GBP traded sharply lower pressured by a sharp drop in UK bank stocks and continued fallout from last week's quantitative ease by the Bank of England. UK Lloyds bank stock falls 6% and HSBC falls 11%. The IMF reports that one-fifth of the UK's GDP has been spent on bank bailouts so far. EUR initially traded lower pressured by report that EU investor confidence falls to record low. EUR downside was limited by gains in cross to GBP and a modest rebound in US equities. JPY traded lower pressured by report of a sharp rise in Japan's corporate bankruptcies and that Japan's current account deficit widens to a 13 year high. Commodity currencies traded lower pressured by rising risk aversion. CAD falls to a five year low pressured by report of a bigger than expected drop in Canadian housing starts.

Investor fears continued to grip the global financial markets as government policies have yet to gain traction and Friday's US unemployment rise to 25 year high points to more global economic weakness. Last weeks Fed custodial holdings show another increase in safe haven demand for US treasuries. Safe haven flows to the USD remain the main driver for Forex, but negative fundamentals intensified selling pressure of the GBP, JPY AND CAD in Monday's trade. No major US economic data was released in today's trade. Key items to note in today's trade are the downside breakout for GBP and CAD and that the JPY failed to attract safe even demand despite weaker equity market trade.

This week's US economic calendar includes the March 10th release of January wholesale inventories expected at -0.8%.compared to -1.4% last month. On March 11th, February Treasury budget will be released expected at -200 Billion compared to -175.6 Billion last month. On March 12th, initial jobs claims for week ending 03/09 will be released expected at 630 K. February retail sales will also be released on March 12th expected at -0.4% compared to 1% last month, along with January business inventories expected -1% compared to -1.3% last month. On March 13th, January trade balance is due for release expected at -38.2 billion compared to -39.9 Billion last month and the University of Michigan March consumer sentiment expected at 55 compared to 56.3 last month.