·         US earnings season starts badly, dollar gains

·         Pound lower as RICS shows falling housing prices

·         Shop prices in the UK gain at a rate of 4.2%

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US earnings season kicked off in earnest yesterday and continues for the best part of 3 weeks. Alcoa, an aluminium company, always kicks off the season and it has started with a bad taste in the mouth. Earnings Per Share (EPS) were 1 cent vs an expectation of 6 cents. While in the grand scheme of things this is no big problem it is a reminder of the relationship between USD and risk.

If earnings season is poor then we would expect the USD to strengthen on haven flows over the course of the next 3 weeks. The banking shares and large household names (Intel, GE, Wal-Mart) will the ones that are watched closest and as such any deviation from prediction could cause some violent swings.

FX markets were fairly quiet yesterday with most pairs staying within their recent trading ranges. Some traders on the corporate desk are forecasting a near term dip in the fortunes of GBP/EUR based on some of their analysis; whether it is a dip towards or through the range lows we’ll have to wait and see.

The data calendar was bare yesterday and is slightly fuller today. Sterling has lost weight overnight after falls in the RICS House Price Balance measure although BRC shop prices were strong. The main figure today is the US Trade Balance due at 13.30.

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