FX Highlights

  • The USD is trading mixed as GBP plays catch up supported by speculation that the BOE may consider pause of asset purchase, JPY traded lower pressured by improving risk sentiment as the Nikkei closes higher and by heavy selling in cross trade to the GBP, EUR pressured by report of falling EU inflation and call for the ECB to lower interest rates, Swiss investor confidence rises to all-time high, AUD mixed supported by hawkish comments from RBA Governor Stevens, CAD pressured by wave of profit-taking and weaker crude and gold prices
  • Focus turns to today's release of US jobless claims Philly Fed and Canada's manufacturing shipments
  • Japan's revised August industrial production rises 1.6%, Reuters Tankan manufacturing index for October falls to -35 compared -33 in September, strong JPY weighs on manufacturing sentiment, Nikkei reports that BOJ corporate bond buying program is nearing an end, JPY lower
  • RBA sold A$830 mln in September compared to A$576 mln in August, RBA Governor Stevens says interest rates will return to a more normal setting as economy recovers, uncertain about the pace and timing of future rate hikes, AUD lower
  • EU September inflation flat, European institutes call on the ECB to lower rates to 0.5%, EUR lower
  • Swiss October ZEW economic expectations improved to all-time high at 65 compared to 58 last month, CHF lower
  • BOE's Fischer is reported against ending BOE quantitative ease next month, but he sees quantitative ease measures working, GBP higher
  • Fed's Bullard says the Fed will not tighten until unemployment falls, Fed's Kroszner says US in no immediate danger of inflation
  • President Obama says the economy is moving in the right direction
  • FOMC minutes for September 22/23 policy meeting state the overall economic activity is beginning to pick up and recovery is underway, members mixed on timing to end MBS purchases with some members open to boosting MBS purchases, the Fed raised its growth forecast for 2009 and 2010 but projects that the unemployment will remain high dropping to 9.25% by end of 2010 and 8% by 2011, the decline in long term yields was puzzling to the Fed given the improvement in the economy
  • Nobel laureate economist Stiglitz warns the US to not intervene to support the USD because there are fundamental reason why the USD is weak and this would make intervention very costly
  • US foreclosure rates rise 23% in the third quarter
  • US equity markets set to open lower, European equities mixed, Nikkei closed 175 points higher

Upcoming Events

  • US - Thursday, initial jobless claims for week ending 10/13 will be released expected at -525k compared to -521k last month along with October Philly Fed expected at 12.5 compared to 14.1 in September
  • CAN - Thursday, August manufacturing shipments will be released expected at -0.4% compared to 5.5% last month