Risk taking returned to the fore in London trading as news that a major UK bank will not need to raise further capital spurred a decline in the safe haven US dollar.
EUR/USD jumped more than 100 pips and was sitting near the 1.30 pivot ahead of the NY session. GBP/USD meanwhile caught a healthy 230 pip rally into the 1.3870 area. The yen crosses were higher as European bourses rallied. USD/JPY rose about 55 pips to 89.20/30 despite the overall weakness in the buck. EUR/JPY added a more robust 170 points into the 116.00/10 zone.

Trading in early NY has seen some this risk appetite come off as a major US machinery manufacturer reported much worse than expected 4Q earnings and brought markets back to the reality that the global recession is far from over. US existing home sales are due at 1000am ET and are expected to continue to underscore the weak underbelly of the US housing market. This, coupled with a plethora of 4Q corporate earnings reports should spur significant volatility. The tone of these reports will undoubtedly guide the direction of EUR and the JPY crosses.

Upcoming Economic Data Releases (NY Session) prev est

  • 1/26 15:00 GMT US Leading Indicators DEC -0.40% -0.30%

  • 1/26 15:00 GMT US Existing Home Sales DEC 4.49M 4.40M

  • 1/26 15:00 GMT US Existing Home Sales MoM DEC -8.60% -2.00%

  • 1/26 15:30 GMT US Dallas Fed Manf. Activity JAN -61.00% - -

  • 1/26 19:30 GMT DE ECB's Weber Speaking in Duesseldorf 26-Jan