Risk appetite screamed back in the NY session as yesterday's stock market rout towards 1997 lows looks to have brought the bargain hunters out of the woodwork. Ultimately stocks recovered all of yesterday's losses – rising 4% – and ended the day right near the Friday close. Treasuries only sold off modestly and the 2-year yield was 4bps higher near 0.97% while the 10-year rose commensurately to a 2.79% rate. Gold sold off a big -$27 towards a 965 close, but the upside bias remains in place while above the 935/930 pivot. The flight back to risk was despite a somber assessment on the US economy from Fed Chair Bernanke and bleak economic data.

Bernanke offered the most dovish commentary on the US economy to date. He said flat out that he does not expect a full recovery for another two to three years – and any 2010 recovery would be contingent on a market rebound and stabilization in the banking sector. Meanwhile, US consumer confidence continued to look ominous for global growth. The expectations component of the Conference Board report sank to a new record low of 27.5 in February after a 42.5 print the prior month. This metric tends to lead real consumer spending and suggests growth in this near 70% chunk of US GDP will continue to worsen. More importantly, however, is the fact that the US consumer is a non-trivial 20% of the global economy and so the implications for global growth and trade are rather detrimental. The fact that the repercussions from a slowdown here are for a more intense slowdown globally still keeps the USD safe haven bid in play for now.

Risk trades in the FX space were not surprisingly better bid. EUR/USD added about 70 pips to 1.2835/40, building on overnight gains here. The bias is up while above 1.2830 but below there could see a try for the 55hr by 1.2790 initially. Expect a good barrier by 1.2900 as well. USD/JPY jumped another 90 points but was struggling to get above the 97 mark. The 97.40 area looks big as this is the highs back to 24 November along with hourly trendline resistance. Through there would open up potential towards 98.30 next. EUR/JPY caught a monumental 180 pip bid and was sitting just above 124 as we head into the NY close. Look for more JPY weakness to emerge on the back of tonight's Japanese trade data.

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  • 2/24 22:30 GMT NZ  Finance Minister English Appears at Parliament Committee
  • 2/24 23:50 GMT JN  Merchnds Trade Balance Total  JAN  -Â¥320.7B  -1179.5
  • 2/24 23:50 GMT JN  Adjusted Merchnds Trade Bal.  JAN  -Â¥148.8B  -Â¥489.8B
  • 2/25 0:30 GMT AU  Wage Cost Index QoQ  4Q  0.90%  0.90%
  • 2/25 0:30 GMT AU  Wage Cost Index YoY  4Q  4.10%  3.80%
  • 2/25 0:30 GMT AU  Construction Work Done  4Q  4.40%  -1.50%
  • 2/25 5:00 GMT JN  Small Business Confidence  FEB  24.8  - -