FX Update : USD

The US dollar was slightly firmer overnight, reversing the earlier Asian and European session's weakness as the EUR rally stalls at 1.2878 while the JPY repelled sharply off 117.28. A lack of follow through left these currencies vulnerable to position liquidation against the USD.

The stock market advanced while the yield curve saw a bear flattening as the market sold off steadily as caution prevailed ahead of the PPI and retail sales numbers today. This gave the USD some much needed rates support.

But key data due today, both domestically and elsewhere, are likely to set a clearer near-term direction in the USD than what has been seen over the last two sessions.

German ZEW at 1000GMT, Euro Q3 preliminary GDP also at 1000GMT and the US core PPI and retail sales numbers at 1330GMT are all likely to have some traction on the USD, the JPY and the EUR today.

Today, we expect retail sales to have declined in October, dragged down by the auto and gasoline components. Excluding gasoline and auto, we expect sales rose modestly after 0.8% in September.
Falling gasoline prices are likely to depress the overall finished goods PPI in October.
There are also numerous Fed speakers on the calendar, with Fed Presidents Poole, Minehan, and Yellen are scheduled to speak later today.