[iForex]

Swine flu has reduced risk appetite, sending equities lower overnight and punishing currencies which depend on tourism, such as MXN. Euro/yen was sold in tandem with unwinding risk, and as Euro/dollar held over 1.2950, the give was in dollar/yen, breaking through 96 stops to a 4 week low. Still, today's Euro high in mid-1.3000 range is 2 cents under yesterday's high, and Euro buying is further constrained by another comment from ECB's Wellink about a refi cut to under 1.00% (now 1.25%). French consumer confidence fell but Italy's business confidence rose and some still think a 2H Eurozone rebound is possible. Yen buying against AUD and NZD was pronounced, as Australia and New Zealand are vulnerable to declines in risk appetite and tourism. Korea's confidence surged to best in 9 mos but strategists believe swine flu spread could take 3.5% out of GDP in EM Asia in the next 2 quarters. Japan retail sales dipped 1.1% m/m, worse than expected and underscoring still sluggish demand; analysts still expect some economic revival in 2H 2009, however. Sterling outperformed Euro as the CBI distributive trades retail sales survey climbed from -44 to +3, highest since January 2008 and while likely a one-off, still signaling less dire economic conditions. Today's US data is not too bad: Case Shiller home price report in 20 metro areas slowed to -18.6% y/y from -19% last month; and US consumer confidence much stronger than expected, best in 2009 and with some expectations the recession may be bottoming. As a result, stocks are higher in the US but not in Europe nor Mexico, where the MXN is taking it on the chin. Next up - Richmond Fed and ABC consumer index. Euro technicals turned negative with the break under 1.3113, now targeting 1.2889.