Risk appetite continued to dwindle into the NY session as President Obama's signing of the $787 billion stimulus package failed to elicit any excitement in the markets. US equities were pummeled more than -4.5% in broad terms and the S&P closed below the critical 800 level to boot – suggesting more weakness could be in store as we muddle through the week. Gold was even better bid and was sitting up about $28 near $970/oz ahead of the NY close. US Treasuries continued to rally as well, with the 10-year yield shedding more than -24bps on the day to a 2.65% close.
US economic data did not help matters with the most contemporary indicator, NY Empire manufacturing, slipping to a dismal -34.7 from -22.2 prior on the back of a sharp contraction in new orders and employment. US homebuilder sentiment remained near all-time lows at 9 and the rub here is that the future sales component fell further to 15 from 17 last month. The economic realities only added to an already moribund day for risk.
The price action in FX was relatively modest, as the market here did most of its talking overnight already. That said, EUR/USD edged about -40 pips lower into the 1.2580/90 area. The 1.2550 support remains elusive for now, but we would expect a break below there should see weakness accelerate. Focus higher if we get back above the 1.2670/80 zone as well. USD/JPY added about 50 pips as dollar strength outdid the yen despite the rout in stocks. The intraday high at 92.75 looms as a decent short term barrier.
Upcoming Economic Data Releases (Asia Session) prev est
- 2/17 23:30 GMT AU Westpac Leading Index (MoM) DEC -1.00% - -
- 2/18 0:30 GMT AU Retail Sales Ex Inflation(QoQ) 4Q - - 1.00%
- 2/18 0:30 GMT AU Preliminary BoP Imports MoM sa JAN -2.00% - -
- 2/18 4:00 GMT JN BoJ Monetary Policy Meeting 18-Feb
- 2/18 5:00 GMT JN Leading Index CI DEC F 79.8 - -
- 2/18 5:00 GMT JN Coincident Index CI DEC F 92.3 - -
