• The USD is trading higher in reaction to report that the German Chancellor Merkel rejects calls for Germany to fund the Greek rescue package and China raises its reserve requirements by 0.5%, equity and commodity markets decline in reaction to the Chinese rate hike and the USD index trades at a seven-month high, the Chinese rate hike generates risk aversion and safe haven demand for the USD, US Chinese trade tensions intensify as China calls on President Obama to not meet with the Dalai Lama, EUR is also pressured disappointing economic data which show that the European economy is slowing, EU industrial output falls more than expected and GDP growth was slower in Q4, CHF underperforms pressured by rumors of SNB intervention, SNB officials would not comment on whether the bank intervened
• Focus turns to today's release of US retail sales, Michigan consumer sentiment and business inventories
• EU December industrial output falls by 1.7%, EU Q4 GDP rose by just 0.1%, Societe Generale's Albert Edwards says the Euro area is headed for breakup because overvalued currency levels hurt competitiveness
• UK's Brown says Q4 GDP may be revised higher, GBP lower
• U.S. Senate to consider a scaled-back job stimulus plan as bipartisan effort on the jobs bill appears to have fallen apart
• The snowstorm on the East Coast could cost the US 90k to 150k jobs in February
• US equity markets set to open sharply lower, European equities mixed, Nikkei closed 128 points higher

Upcoming Events

• US - Friday, January retail sales are due for release expected at 0.5% compared to -0.2% last month along with February Michigan consumer sentiment expected at 75 compared to 74.4 last month and December business inventories expected at 0.2% compared to 0.4% last month
• CAN - Friday, no major Canadian economic data is due for release today

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