• USD: Higher, risk appetite drops as stocks and commodities decline, fear of double dip recession
• JPY: Higher, supported by safe haven demand, gains in cross trade
• EUR: Lower, German Wiseman said Germany may be at risk to double dip recession in late 2010
• GBP: Lower, retail sales improve and public-sector borrowing rose more than expected
• CAD and AUD: AUD & CAD lower, tracking weaker equity and commodity prices, RBA policy uncertainty

Overview     
A wave of pessimism hit the global equity and commodity markets Thursday sending the USD sharply higher as investors trim risk exposure. President Obama's warning that too much US debt could increase the risk of a double dip recession, a similar warning from the German Wiseman that Germany could be at risk for a double dip recession in late 2010 and a statement from Treasury Secretary Geithner that the credit crunch is not over appeared to have dented enthusiasm about the global recovery. Wednesday's report of the 10.6% drop in US housing starts,  today's report of a sharp rise in UK public sector borrowing and a statement from Canada's finance minister that the Canadian economy has not yet recovered also contributed to uncertainty about the global recovery. Today's wave of pessimism came even as the OECD doubled its growth forecast for 2010, the UK reported better than expected retail sales, the RBA says lending is picking up and the Baltic freight Index rose to a new high for 2009. The OECD expects global growth to expand by 1.9% in 2010 and 2.5% 2011. The OECD also said that the Fed and ECB should maintain accommodative policy well into late 2010.  US economic data was mixed with jobless claims reported close to expectations, and LEI rose by slightly less than expected. The Philly Fed came in well above expectations.

It is not clear whether today's price action marks a shift in overall risk appetite or reflects investor decision to begin to liquidate positions and lock in profits before year-end. Although the Fed and most of the G-20 have confirmed that they do not plan to withdraw fiscal and monetary stimulus until global recovery is secured, some investors may be coming to the conclusion that there may not be much more upside potential in the global equity and commodity markets without the injection of new liquidity as the impact of stimulus begins to fade.

Today's US data:
Jobless claims for week ending 11/14 were unchanged at 505k. Continuing claims dropped to 5.61mln from 5.65mln last week. The four week moving average for initial claims is at its lowest level for the year. Continuing claims are at the lowest level since March 14th. October LEI rose by 0.3%, a rise 0.4% was expected. The November Philly Fed rose to 16.7, a reading of 12.5 was expected.

Upcoming US data:
No major US economic data is scheduled for release on Friday.

JPY
JPY traded higher supported by safe haven flows sparked by a drop in global equity markets and a wave of pessimism about the global recovery. JPY was also supported by sharp gains in cross trade with the JPY rallying 2% against the AUD and over 1% against the GBP. JPY gains versus the AUD are attributed to a sharp pullback in demand for high yield currencies sparked by today's drop in risk appetite. GBP was pressured by report of much larger than expected UK net public sector borrowing in October There was limited reaction to statements from Japan's Finance Minister Fujii about the strengthening of the JPY. When Fujii became the new finance minister of Japan in late August he made numerous statements that appeared to indicate that he believes that a strong JPY is in the best interest of the Japanese economy.