More bad economic news across the pond saw overnight risk aversion continue into the London session. European bourses are down about -2.5% on average and this has trickled through into US futures, which are about -1.5% lower in early NY. US Treasuries are bid with the 10-year yield slipping -5bps to 2.92% and gold is rallying more than $10 here into the 917 area.

Data in the eurozone was ugly to say the least. German retail sales plunged -0.6% in January while the market was looking for a small increase. This took the annual rate to a dismal -1.3% from +0.4% and suggests things in Europe's biggest economy continue to look grim. French unemployment jumped to 8.2% in 4Q from a prior 7.6% and this also came in much worse than forecast. If that wasn't enough, the 4Q eurozone GDP report showed a huge downward revision to household consumption to -0.9% from a previously reported -0.2% and down from +0.1% in 3Q. EUR/USD sank -60 points into the 1.2550 zone. The ECB rate decision upcoming now at 745am ET and the Trichet press conference at 830am ET should see the price action pickup.

Things were no better in the UK where home prices plunged a steeper than expected -2.3% in the month of February, taking the three month rate to a horrid -17.7% to boot. The BOE also slashed rates by an expected -50 basis points to a new record low 0.50%.
It was surprising that they cut this much despite announcing very aggressive quantitative easing measures. The bank will buy corporate bonds, medium and long-term government paper in an attempt to support the credit markets. This seems more like a panic move than anything and the market has accordingly punished the pound. GBP/USD sank more than -125 pips in London trading and was sitting near 1.4050 ahead of NY. Cable's hourly trendline by 1.4010 looks like the next crucial support area and below likely revisits this week's lows by 1.3950 next.

Upcoming Economic Data Releases (NY Session) prev est

  • 3/5 12:45 GMT EC ECB Announces Interest Rates 5-Mar 2.00% 1.50%

  • 3/5 13:30 GMT CA Building Permits MoM JAN -3.90% -3.50%

  • 3/5 13:30 GMT US Nonfarm Productivity 4Q 3.20% 1.60%

  • 3/5 13:30 GMT US Unit Labor Costs 4Q 1.80% 3.40%

  • 3/5 13:30 GMT US Initial Jobless Claims 28-Feb 667K 640K

  • 3/5 13:30 GMT US Continuing Claims 21-Feb 5112K 5150K

  • 3/5 13:30 GMT EC Trichet Speaks at ECB Monthly News Conference

  • 3/5 15:00 GMT CA Ivey Purchasing Managers Index FEB 36.1 37

  • 3/5 15:00 GMT US Factory Orders JAN -3.90% -3.50%

  • 3/5 15:00 GMT US Fed's Kohn Testifies on AIG Before Senate

  • 3/5 16:00 GMT EC ECB's Tumpel-Gugerell Speaks