The pendulum of risk shifted back towards risk taking overnight as bullish economic data drove shares higher. UK consumer prices were a higher than anticipated 0.0% in July, leaving the annual rate at 1.8% while the market was looking for a dip to 1.5%. Meanwhile, the German ZEW blew away market expectations, printing a 56.1 result for August after a 39.5 read the prior month. The index had not been this high since early 2006 and suggests the economic environment in the eurozone is looking up. Equities pushed higher with European bourses adding about 1% across the board.

EUR/USD rallied from a low 1.4067 towards 1.4154 before settling just above the 1.41 support zone ahead of the NY open. The yen crosses continued to enjoy a bid tone on the back of the stock rally and USD/JPY continues to flirt with the 95 pivot after making a high at 95.29 earlier. EUR/JPY has come off the boil towards 134 after printing a 134.80 nearby peak. The commodity currencies, meanwhile, continued to trade in a tight range with USD/CAD and AUD/USD trading little more than 40 pips wide. Economic data will continue to set the tone now in early NY. US producer prices and housing starts are the ones to watch at 830am ET. Look for more upbeat numbers to help the risk rally extend.

Upcoming Economic Data Releases (NY Session) prior expected

8/1812:30 GMTCA  Int'l Securities TransactionsJUN18.893B  - - 
8/1812:30 GMTUS  Producer Price Index (MoM) JUL  1.80%-0.20% 
8/1812:30 GMTUS  PPI Ex Food & Energy (MoM) JUL  0.50%0.10% 
8/1812:30 GMTUS  Producer Price Index (YoY) JUL  -4.60%-5.80% 
8/1812:30 GMTUS  PPI Ex Food & Energy (YoY)JUL  3.30%2.80% 
8/1812:30 GMTUS  Housing Starts  JUL  582K 598K
8/1812:30 GMTUS  Building Permits JUL  563K576K 
8/1821:00 GMTUS  ABC Consumer Confidence16-Aug-47 - -