The US Dollar consolidated in its new stronger ranges this morning as investors await a key announcement from the Obama administration that is expected to outline a fresh stimulus package aimed at encouraging job growth and jumpstarting the economy. After last week's abysmal nonfarm payrolls report and this morning's worse-than-expected reading of weekly jobless claims, the labor market has become the main point of focus as the presidential race for 2012 heats up. Republican candidates found themselves at odds over social security and job creation in a cursory debate last night, topics that most had not expected to be a point of contention amongst conservatives. Meanwhile, President Obama appears set to introduce a further $300B in spending to extend tax cuts, raise hiring incentives, and create public works projects. However, in an encouraging turn of events, the trade deficit narrowed by more than expected last month, reaching a three month low as exports climbed to a record and oil imports fell. The gap shrank by 13% to -$44.8B from -$51.6B in the previous month, a hopeful sign that growing exports could help the US economy weather a slowdown in domestic consumption. The numbers are a positive for the dollar, but it will likely remain relegated to its recent ranges ahead of President Obama's speech.

The EUR tumbled in early trade this morning, but has since pared some of those losses as investors digest the ECB's latest decision. The Bank kept rates on hold, as was expected, but ECB President Trichet referenced intensifying downside risks to the region's economy, causing investors to cut bets on future interest rate hikes. Trichet went on to say that inflation risks are now balanced - no longer to the upside. With the likely end to the ECB's rate-tightening cycle, the common currency will find it increasingly difficult to post sustainable gains.

The GBP was one of the best performing currencies overnight, gaining against all but one of its major rivals after the BoE chose to keep interest rates and asset-purchases steady. Economists had been urging the Bank to increase its bond purchases, and after the two policymakers that had been calling for rate hikes altered their votes to holding steady last month, investors had begun to price in a second round of quantitative easing. While the voting tally and details will not be known until later this month when the minutes from the meeting are released, it appears that inaction will remain the BoE's policy for the time being, at least until more evidence of recession materializes.

The JPY weakened slightly, but overall, remains within its recent ranges. The yen has been slowly grinding lower against most of its major counterparts as dovish government rhetoric increases. This morning, Japan's Economic and Fiscal Policy Minister told reporters that the yen is still at a considerably high level given that it is higher than the rate at which Japanese companies calculate their earnings forecasts. He also said that the government will assemble a comprehensive plan to respond to the stronger currency, including measures to ease the pain of the yen's historically high rate.

The CNY made an unusually large one-sided move overnight, strengthening against all of its major counterparts after unnamed Chinese officials told the EU that the renminbi will be fully convertible by 2015. Somewhat contradictorily, the PBoC governor told reporters that while there is no timetable for convertibility, the offshore yuan market, CNH, is developing faster than [they] imagined. Convertibility will likely lead to an increase of capital flows into China and thus a stronger renminbi, but it will also increase the currency's role in international trade and as a potential reserve currency alternative.

The Commodity Currencies are mixed this morning with the NZD gaining while the AUD, CAD and ZAR all declined. Raw goods are mostly higher with oil at $90/bbl, gold at $1855/oz and copper rising to $412/lb. The CAD is slightly lower this morning despite the rising price of oil, Canada's main export, after the BoC left interest rates on hold and weekly jobless claims in the US, Canada's main trading partner, were worse than expected. BoC governor Carney told reporters this morning that there was a diminished need for higher borrowing costs in light of slowing global economic momentum and heightened financial uncertainty, a stance similar to that of a growing number of central bankers worldwide. The AUD is also slightly lower, but has recovered from a steep drop in early trading after a disappointing report that showed the Australian economy shed more jobs than expected. The RBA told reporters yesterday that they have the flexibility to maintain steady settings while markets remain unstable - read no shift in interest rate policy in the near term. The ZAR was particularly hard hit after a report showed that South African manufacturing contracted by 6% as hundreds of thousands of workers went on strike in August. With no major economic data to change investor's minds, the NZD was the biggest winner against the USD overnight ahead of next week's RBNZ meeting at which investors expect either a rate increase or at least confirmation of a forthcoming hike.


































10-Year Treasury Yield:




 $ 1,856.60

 $ 41.70


 $ 413.10

 $ 1.55

Crude Oil: 

 $ 89.89

 $ 0.48





This market summary is prepared by Union Bank's Global FX Department for the general information of its customers. It is based on the most accurate information currently available, but should not be considered investment advice or a guarantee of future exchange rates or trends..