Yesterday's market was characterized by a broad USD sell-off, led by EURUSD squeezing to a high of 1.4653 on benign industrial production numbers (-0.3% M/M), followed by the European Commission's forecasts that the Eurozone may expand 0.2% in Q2 and 0.1% in Q4. Employment numbers for the 16-country bloc continued to be lacklustre in the second quarter (-0.5% Q/Q), but this failed to have significant market impact.

Equity markets across Europe ended the day largely unchanged, the Dow Jones and S&P indices managed to end marginally higher despite the looming trade dispute with China over tyre tariffs. Overnight the major Asian indices stabilized somewhat after yesterday's losses, the notable exception being the Hang Seng closing down over 1% on suspected profit-taking.

The RBA released minutes of the September meeting (where the cash rate was left unchanged at 3%) and continued to convey a tone of general improvement in the economic environment. The statement gave the strongest indication yet that conditions were evolving in a way that might require the Bank to adopt a less expansionary policy stance, highlighting the resilience of the domestic economy substantially stronger than expected, along with a backdrop of wider spread recovery in the global financial system and risk sentiment. Nevertheless, they still cautioned that the signs of recovery could be purely a consequence of fiscal stimulus measures and were wary of tightening prematurely. AUD initially sold off on the release to below 0.8600, as perhaps some were hoping for a more bullish tone, but soon rallied back near to the day's highs at 0.8630 once the full statement was digested. The other notable high-yielder, NZD, was also buoyed by record-low borrowing costs in the USD, fuelling demand as it reached a high of 0.7037.

The economic docket today is packed with potentially market-moving data; Europe kicks off with Q2 Industrial Production out of Switzerland, followed by UK CPI for Aug. The main focus however will be German ZEW economic expectations for Sep (61.0 exp., 56.1 prior). The afternoon session is dominated by a slew of US releases; in particular Retail Sales for Aug (1.7% M/M exp., -0.1% prior) which should give an important gauge of domestic consumption in the world's largest economy. At the same time we have PPI data for Aug (0.8% M/M exp., -0.9% prior) ahead of tomorrow's crucial CPI figures, and later on Empire State manufacturing index and Business Inventories.

G10 Advancers and Decliners vs USD
Global IndexesCurrent Level% Change
Nikkei 225 Index10,217.62+ 0.15
Hang Seng Index20,908.59- 0.11
Shanghai Index3,033.73+ 0.23
FTSE 100 Index5,022.56+ 0.07
DAX Index5,625.64+ 0.09
SMI Index6,226.94+ 0.02
S&P future1,047.90+ 0.60
World MarketsCurrent Level% Change
Gold996.88- 0.33
Silver16.51- 0.24
VIX23.86- 1.20
Crude wti68.63- 0.33
USD Index76.76+ 0.13
Todays CalenderEstimatesPreviousCountry / GMT
CPI, % m/m (y/y) Aug0.3 (-1.4)0.0 (1.8)GBP / 08.30
RPI, % m/m (y/y) Aug0.2 (-1.5)0.0 (-1.4)GBP / 08.30
RPIX, % m/m (y/y) Aug0.2 (1.2)0.0 (1.2)GBP / 08.30
BoE Governor Mervyn King and other MPC members giv----GBP / 08.45
Hourly labour costs, y/y Q2--3.7EUR / 09.00
Germany: ZEW economic expectations index Sep61.056.1EUR / 09.00
Retail sales, % m/m (y/y) Aug1.7 (-6.5)-0.1 (-8.3USD / 12.30
Retail sales ex autos, % m/m (y/y) Aug0.4 (-7.1)-0.6(-8.5)USD / 12.30
Producer price index, % m/m (y/y) Aug0.8 (-5.3)-0.9(-6.8)USD / 12.30
Core producer price index, % m/m (y/y) Aug0.1 (2.2)-0.1 (2.6)USD / 12.30
Empire State mfg. index Sep15.0012.08USD / 12.30
Business inventories, % m/m (y/y) Jul-0.8(-11.1-1.2 (-9.9USD / 14.00
Fed Chairman Bernanke speaks on the financial cris----USD / 14.00
ECB Executive Board member Stark speaks on Moneta----EUR / 15.00
Currency Tech
R 2: 0.8815
R 1: 0.8695
CURRENT: 0.8605
S 1: 0.8507
S 2: 0.8380USDCAD
R 2: 1.1100
R 1: 1.0950
CURRENT: 1.0839
S 1: 1.0630
S 2: 1.0545

R 2: 135.00
R 1: 134.40
CURRENT: 132.96
S 1: 131.05
S 2: 129.35

R 2: 13.573
R 1: 13.545
CURRENT: 13.3433
S 1: 13.245
S 2: 13.130