FOREX IN REVIEW

Today will see the release of GDP figures across Europe including those of France, Germany, Austria, Slovakia, Hungary, Portugal, the Czech Republic and the Netherlands. Month over month declines are expected across the board with contractions expected in many economies including the figure for the entire Eurozone. As the pinch of austerity bites into tax revenues and spending it could continue to constrain growth as governments fight vigorously to cut budget deficits. In yesterday's session, most European equity indices closed lower, led to the downside by the -0.64% decline in the Dutch AEX. The German DAX was also weaker, sliding -0.50% while the Spanish IBEX outperformed peers, rising 0.31%. EURUSD climbed back above the 1.23 handle is trading at 1.2345, ever-closer to the 1.2350 level.

As was expected, even though the Bank of Japan meeting last week was short on both rhetoric and action, the BoJ is considering further moves to stimulate inflation and growth. While no strategies have been officially announced, the policy members are said to be leaving all options on the table. Meanwhile, turning to India, the Central Bank has more limited scope for action as high inflation reduces the ability to implement stimulus. The rupee has fallen nearly 18% against the dollar in the past 12 months creating pressure on food and energy price. Asian equities are moving higher on the talk of stimulus in Japan, with the Nikkei gaining 0.52% followed by a 0.32% gain in the Hang Seng and 0.17% rise in the Australian ASX 0.17%. USDJPY has ticked up 0.11% to 79.410.

American equity markets experienced the lowest volume session of the year as the drop in the S&P 500 reversed the longest rally of 2012. The Dow Jones slid -0.29% while the S&P 500 declined -0.13%. The Nasdaq was surprising higher, rising a marginal 0.05% as tech stocks helped buoy losses in other sectors. U.S. retail sales are due later today in what traders are anticipating will show month over month gains and demonstrate a rebound in consumer spending. Commodities pulled back from record highs as traders reduced net long exposure according to CFTC data. Corn futures tumbled back below the $800 per bushel level and Cocoa fell -2.40%. Precious metals are slightly stronger after yesterday's drop, with gold rising 0.16% to $1615.10 while copper continues to dive, ticking down -0.24%.
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