Risk aversion prevailed throughout the London session despite another major US bank reporting much better than anticipated 1Q earnings. European bourses are taking it on the chin and down more than -1.5% on average. That the markets have failed to print any significant gains over the last week or so despite a better tone to the economic and earnings news is ominous and suggests that the latest bear market rally could be petering out. Gold recovered some of the lost ground and is up about $3 in early NY by the 871/872 area. Expect good resistance into the 900 zone here while solid support still lurks into 865.

In currencies, it was the classic flight to safety and the US dollar was once again the main beneficiary here. EUR/USD shed another -40 pips and was sitting near 1.2960 ahead of the NY open. 1.2945 is key short-term support as this is a 61.8% Fibonacci retracement from the 4-Mar to 19-Mar 1.2460 to 1.3740 upmove.
Expect weakness to accelerate sharply below there. The yen crosses continued to lose ground with USD/JPY off -33 points towards 98.60/70 and EUR/JPY down a more aggressive -80 pips into the 127.70/80 area. US futures are trading at overnight lows and we would expect a bad day in stocks to see commensurate losses in the JPY crosses.

Looking ahead to the NY session, there are a couple of things to chew on. US leading indicators are due up at 10am ET and the market will be focused on this for any signs of a recovery on the horizon. Consensus is for a -0.2% decline in March after a -0.4% slip prior. We would expect a weaker number to see risk assets come off some more and the USD to remain better bid. Fed Chairman Bernanke will be giving a speech at the same time and while the topic looks mostly on the academic side, traders will be looking for potential market moving nuggets here. Look for earnings releases from a couple of major US companies after the 4pm ET stock market close as well -- these should elicit some price action in the yen crosses.

Upcoming Economic Data Releases (NY Session) prior expected

  • 4/20 12:30 GMT CA Int'l Securities Transactions FEB - - 10.428B

  • 4/20 13:00 GMT US Fed's Evans Speaks in Chicago

  • 4/20 14:00 GMT US Leading Indicators MAR -0.20% -0.40%

  • 4/20 14:00 GMT Bernanke Speaks on Financial Literacy and Education