European equites enter market correction,.....>

FOREX: European equites enter market correction, extending risk-off

- Across Europe, a number of equity indices have entered correction, with

EuroStoxx50 and FTSE-100 futures over 10% lower from their recent high. This has

helped fuel further cross asset risk-off flows, resulting in further CHF

strength and weakness in high beta currencies and emerging markets.

- EUR/USD hit a new recovery high up at $1.0898, stopping just short of the

$1.09 handle. The single currency is also picking up well against GBP, with some

of the strength being attributed to comments from ECB's Holzmann, who stated

there were heated discussions over the inflation target last week. Next

resistance kicks in at 1.0926, marking the Feb12 high and noted key resistance.

- Following yesterday's unattributable strength, GBP is in retreat and is the

poorest performer in G10. Yesterday's lows in GBP are still a way away from

current levels, but a momentum pickup could easily see 1.2915 tested.

- US New Home sales for January are the sole key release on the data calendar

today, with more attention likely paid to central bank speakers including ECB's

Lagarde and Makhlouf.