The London session saw a modest return to risk in FX as the overnight selloff looks to have been deemed overdone. EUR/USD rose about 55 pips and was sitting near 1.3140 just ahead of the NY session. This was despite a bad batch of data as German unemployment ticked up more than expected to 7.8% from 7.7% while eurozone consumer confidence was a weak -31 in January from -30 previously.

Cable rebounded a sharp 210 pips to 1.4320 after being knocked down overnight. A report from a major investment house that an ''Iceland-style currency crisis'' in the UK is exaggerated looks to have put a bid under the currency. Economic data was paltry as UK home prices slipped to an annual rate of -16.6% in January from -15.9% prior – though this was likely priced in.

Top tier economic data and some more 4Q corporate earnings reports now due up in NY trading should elicit some good price action in EUR and JPY crosses. US durable goods are expected to come in at -2.0% in December while initial jobless claims are forecast to slip a touch to a still-high 575K in the latest week. Look for weaker than expected results here to send stock futures lower still and this should weigh on FX risk trades to boot.

Upcoming Economic Data Releases (NY Session) prev est

  • 1/29/2009 13:30 GMT CA Industrial Product Price MoM DEC -2.60% -2.80%

  • 1/29/2009 13:30 GMT CA Raw Materials Price Index MoM DEC -13.40% -10.00%

  • 1/29/2009 13:30 GMT US Durable Goods Orders DEC -1.00% -2.00%

  • 1/29/2009 13:30 GMT US Durables Ex Transportation DEC 1.20% -2.60%

  • 1/29/2009 13:30 GMT US Initial Jobless Claims 24-Jan 589K 580K

  • 1/29/2009 13:30 GMT US Continuing Claims 17-Jan 4607K 4595K

  • 1/29/2009 15:00 GMT US New Home Sales DEC 407K 400K

  • 1/29/2009 15:00 GMT US New Home Sales MoM DEC -2.90% -1.70%

  • 1/29/2009 17:00 GMT UK Bank of England's Blanchflower to Deliver Speech 29-Jan

  • 1/29/2009 21:45 GMT NZ Building Permits MoM DEC 4.30% - -