The buck continued to gain ground in the London session as risk aversion remained the order of the day. Weekend comments for US Treasury Secretary Geithner that banks will continue to need ''large amounts'' of aid, coupled with the ousting of GM's chief executive look to be the major headlines behind the flight to safety. European bourses are getting hammered and down -2.6% on average thus far while US futures point to a -2.2% open and an S&P back below the critical 800 support zone. Gold is -$10 lower near 914/913 despite the risk aversion as USD strength outpaces demand for the precious metal thus far.

Economic data across the pond was all about confidence and the news was not good. The eurozone business climate indicators dropped to -3.58 in March from -3.40 the prior month, in what is now a record low back to 1985. Consumer confidence in the eurozone also dropped to a record low -34 for the month after an already dismal -33 read previously. The news in the UK continued to worsen as well. Net consumer lending printed a much weaker than expected -0.2B in February from +0.2B prior.
This was the first contraction in credit since data began back in 1993 and suggests the consumer retrenchment is in full effect.

Poor economic data coupled with ominous headlines for financials had the market flocking back to the US dollar. EUR/USD shed about -40 pips towards 1.32 and remained under pressure as the ECB rate meeting looms later this week. Trichet is set to speak at 1030am ET in what could be a preview of what to expect and dovish comments here could see EUR/USD back to the 1.3158 intraday lows. The yen crosses were mixed after taking a pummeling overnight. USD/JPY was modestly higher near 96.70/80 while EUR/JPY sank about -20 points into the 127.60 area as the moves in the two pairs were more about USD strength than anything.

Upcoming Economic Data Releases (NY Session) prior expected

  • 3/30 14:30 GMT US Dallas Fed Manf. Activity MAR -57.30% -45.00%

  • 3/30 14:30 GMT BE ECB's Trichet, ECB's Wellink Speak at EU Parliament

  • 3/30 18:05 GMT CA Bank of Canada Governor Mark Carney Speaks in Edmonton