Financial markets take massive hits

The Dollar hit a 1 year low against the Japanese Yen and a two month low against the Euro yesterday. Durable goods orders dropped 7.8 percent in the month of January, which was the largest decline in 3 years due mainly to civilian airline orders helping to push orders for non-defense goods.

Orders which are heavily skewed by aircraft fell by 3.1% in January following a downwardly revised 2.8% gain in December. Even though consumer confidence hit a 5 year high and existing home sales increased by the largest amount in 2 years, the drop in durable goods orders was what mattered.

The combination of low inflation, softer growth and problems in the sub-prime lending market will make it difficult for the Federal Reserve to raise interest rates again this year

Many eyes will turn to data out today to judge short term dollar moves that may have a longer term bearing. Today we have the USD GDP Annualized q/q at 1.30 followed by the Chicargo PMI at 2.45.

Also today we have Fed Chairman Bernanke Speaking at 3pm and his comments will be closely watched for any indication on future direction.

World stock Markets crashed yesterday sparked by a massive 9% slide on the Shanghai.

Chinese wobbles fed through to Europes markets and by 3pm Germany's main Dax shedded 2.4% with Frances sliding by 2.8% with the FTSE down by 2.4%. Many feel the growing tension with Iran led investors to take some risk off their table.

German CPI accelerated in the month of February even though the rise was slightly softer than expected to 0.4% from an anticipated 0.5%. Also German retail manufacturing activity jumped slightly in the month of January to 45.0 compared to last month's 43.9.

All eyes today will be on Trichet's comments at 2pm.

There was no major data released from the UK yesterday which means that we will have to look ahead to today’s data, including the consumer confidence survey at 10.30am. Earlier this morning we saw the Nationwide Housing price report come in slightly higher than anticipated at 0.7%.

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