FX Highlights

  • The USD is trading lower pressured by the return of risk appetite as equity markets rally and gold rises to a new record high, Fed Chairman Bernanke's reaffirmation that interest rates will remain low fuels equity markets gains and weaker USD, AUD supported by report of a surge in Australia's leading indicator and a rally in the price of gold to a new record high, GBP pressured by the release of BOE policy minutes, the BOE policy board split three ways on quantitative ease with some members warning about the risks of further expansion of asset purchases and other members calling for even greater expansion of quantitative ease, the MPC minutes also state that the BOE discussed a possible cut in the remuneration paid on UK bank deposits, EUR rallies in cross to the GBP and GBP trades lower in reaction to the MPC split, CAD rallies supported by the rise in commodities and report of higher Canadian CPI
  • Focus turns to today's release of US CPI, housing starts and building permits
  • Australia's Westpac September leading index jumped to 5.8% from 3.7% last month, Q3 wage price index rose 0.7%, RBA watcher McCrann expects the RBA to hike rates 25 bps in December, AUD higher
  • UK November CBI manufacturing orders improve to -45 compared to -51 last month, MPC minutes for the November BOE policy meeting show that he BOE policy board is split three ways on quantitative ease, GBP mixed
  • EU current account balance falls to -5bln compared to -3.5bln last month, EUR higher
  • Canada's CPI rose for the first time in four months as energy prices rise, CAD higher
  • Treasury Secretary Geithner says rebalancing global economy will require reducing demand from US
  • US two year yields dropped to a two year low
  • US Mortgage delinquencies hit another record high in 2Q, 6.25% of mortgage loans were 60 or more days past due
  • NAHB dropped to 17 from 18 last month, the drop occurred before the Congress extended the tax credit for home buyers
  • US equity markets set to open higher, European equities 0.5% higher, Nikkei closed 53 points lower

Upcoming Events

  • US - Wednesday, October CPI will be released expected unchanged at 0.2% along with October housing starts expected at 600k compared to 590k last month and building permits expected at 580k
  • CAN - Wednesday, October CPI will be released expected at 0.1% compared to flat last month, (already released)