FX Highlights

  • USD and JPY are trading higher as global equity markets decline on recovery worries, the Shanghai Index falls 4.7%, GBP lower pressured by MPC minutes which showed that BOE King and two other MPC members wanted a larger expansion of quantitative ease and the UK press warns about risk of UK government debt default, EUR pressured by report that German producer prices declined at a record pace in July, CAD traded lower pressured by report of weaker than expected Canadian CPI, Canadian inflation rate sank to a 56 year low Australia's leading index improves to a seven-month high, AUD sharply lower pressured by falling equities
  • Focus turns to today's release of US MBA mortgage applications and US equity market price action
  • UK CBI August manufacturing orders improved to -54 from -59 last month a reading of -50 was expected, MPC voted 6 to 3 in favor of expansion of quantitative ease by £50 bln, three MPC members including King wanted a larger increase in quantitative ease of £75 bln, MPC notes that quantitative ease is having a positive impact but expressed concern about weak UK money supply growth
  • The Guardian reports that the UK government could default on its debts, GBP lower
  • Canada's July CPI falls 0.3% and 0.9% y/y, core inflation rate flat, CAD lower
    Australia's June leading index falls 3.3% compared to -5.3% in May, AUD lower as equity market decline
  • The Telegraph reports that Germany faces a second credit crunch wave, German producer prices decline by a record 1.5% in July, EUR lower
  • IMF says the global recession is over but the recession has left deep scars and the impact will last many years
  • GM to bring back 1350 workers as demand rises for GM cars
  • Warren Buffett writing in a New York Times op-ed piece says the US economy is out of the emergency room and appears to be on slow path to recovery, he went on to say that US federal debt poses risks to the economy
  • PIMCO says USD to fall against emerging currencies on reserve concerns
  • US equity markets set to open lower, European equities 1% lower, Nikkei closed 80 points lower

Upcoming Events

  • US- Wednesday, no major reports are due for release today
  • CAN- Wednesday, July CPI expected to fall 0.2% with core rate at 0.1%, (report has already been released)