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Forex - EUR/GBP, GBP/USD Flows - Step up in PMI waves goodbye to QE... at least this week
Written by article default Monday, 01 November 2010 10:37
Manufacturing PMI at 54.9 is better than expected and will put the final nail on the coffin of any hopes of more QE from the BoE this week. GBP, unsurprisingly is up on the announcement, though that won't be quite so welcome among the exporters.
Forex - USD/YEN, USD INDEX Flows - WSJ: One Probe, 50 States, High Stakes; Foreclosures
Still cautious trading, ahead of tomorrow's US mid-term state elections and also Fed FOMC, not forgetting RBA at 0330GMT, BoJ, BoE, ECB decisions. Focus on foreclosures problems as well, could see risk aversion and stocks fall, given recent rally. WSJ: Tom Miller is confronting the reality of how hard it is to get all 50 state AGs to agree on anything. The 66-year-old Mr. Miller leads the nationwide investigation into the foreclosure mess that erupted in Sept. The AGs are scrutinizing whether home-loan servicers violated state laws against deceptive practices by submitting affidavits and foreclosure documents without confirming the paperwork's accuracy. The investigation could lead to civil charges and inescapable pressure on financial institutions to rewrite a mountain of mortgages. On FX, USD/YEN at 80.40-42, off 15-yr lows of 80.21 seen earlier, with market cautious of BoJ/MoF intervention. USD INDEX off lows, as EUR, GBP, AUD dips, at 77.020, eye test of 77.50, risk aversion.WL
Forex - EUR/USD, EUR/YEN Flows - EUR, EUR/YEN vulnerable on eurozone concerns; Fed FOMC
EUR edging down to 1.3972-75 in Europe/ London, cautious trading ahead of key events - US elections, Fed FOMC (not forgetting, RBA, BoJ, BoE, ECB), vs day highs 1.4011. EUR/YEN back down at 112.60-63, vs morning "spike" high of 113.30. EUR could dip on ongoing concerns over eurozone, con't Telegraph: Local banks have stepped into the breach, borrowing cheaply from the ECB to buy their own state debt at higher yields in a `carry trade' that concentrates risk. These 4 countries (Greece, Portugal, Spain, Ireland) account for the lion's share of the €448bn in ECB funding for banks (Spain €98bn, Greece €94bn). Frankfurt is propping up this unstable edifice. Mr Trichet may well fret. An ominous pattern has emerged across much of the eurozone periphery: tax revenue keeps falling short of what was hoped. Austerity measures are eating deeper into the economy than expected, forcing further fiscal cuts. On FX, EUR/USD still vulnerable, eye 1.3850, EUR/YEN eye break of 112.00 to 111.