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The euro came off vis-? -vis the U.S. dollar today as the single currency tested bids around the US$1.2675 level and was capped around the $1.2725 level. Stops were reached below the $ 1.2700 figure, representing the 50% retracement of the move from $1.2460 to $1.2940. Data released in the U.S. today saw the employment cost index rise 1.0% in the three months to September, the largest quarterly gain since Q2 2004. This print was above expectations and employment costs are now up 3.3% over the past year, the fastest annual rise since March 2005. Fed hawks will argue that these data are evidence that elevated inflation costs are passing through the supply chain and impacting salaries and pay, hence a need for continued rate hikes. Data released in the U.S. yesterday saw the Midwest manufacturing index fall 1.1% m/m in September. In eurozone news, EMU-12 harmonized inflation was up 1.6% y/y in October, down from 1.8% y/y in September ??“ the smallest rise since February 2004. Also, the EMU-12 October economic sentiment indicator rallied to 110.3 from 109.3 in September. Additionally, French and Italian producer price inflation came in weaker-than-expected. Euro bids are cited around the US$ 1.2655 level.

??/ CNY

The yen depreciated vis-? -vis the U.S. dollar today as the greenback tested offers around the ??118.00 figure and was supported around the ??117.30 level. Technically, today??™s intraday low is right around the 23.6% retracement of the move from ??108.95 to ??119.85. As expected, Bank of Japan decided to keep interest rates unchanged at +0.25% and BoJ Governor Fukui reiterated the central bank will raise interest rates gradually. The central bank??™s semi-annual outlook was released overnight and reported the economy is recovering on a sustained basis but added the increase in inflation is lagging. BoJ estimated economic growth will moderate to 2.1% in the year to March 2008 from 2.4% in the current fiscal year. The central bank, however, reduced its inflation forecasts and now estimates core consumer prices will rise 0.3% in the current fiscal year to March, down from the previous estimate of +0.6%. Most traders now believe the central bank will not lift rates until Q1 2007 and a senior BoJ official was noted today as saying the central bank will not lift rates until the core CPI rate exceeds +0.5%. Many data were released in Japan overnight. First, household spending declined 6% y/y and September orders received by the 50 largest contractors were up 9% y/y. Second, Japan housing starts were up 4.0% y/y and September employee average pay was unchanged y/y. Third, the September unemployment rate ticked up to 4.2%. The Nikkei 225 stock index gained 0.29% to close at ??16,399.39. Dollar bids are cited around the ??116.75 level. The euro moved higher vis-? -vis the yen as the single currency tested offers around the ??149.80 level and was supported around the ??149.15 level. The British pound and Swiss franc moved higher vis-? -vis the yen as the crosses tested offers around the ??224.00 and ??94.30 levels, respectively. The Chinese yuan weakened vis-? -vis the U.S. dollar as the greenback closed at CNY 7.8790 in the over-the-counter market, up from CNY 7.8738, and at CNY 7.8800 in the exchange-traded market.

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The British pound moved higher vis-? -vis the U.S. dollar today as cable tested offers around the US$ 1.2755 level and was supported around the $1.2675 level. Many U.K. economic data were released today. First, Nationwide house prices rose 0.7% m/m and 8.0% y/y in October. Second, the U.K. government reported property transactions in England, Wales, and Northern Ireland reached their highest level in two years in Q3. Third, CBI??™s monthly distributive trades survey evidenced a decline in high street sales this month with more retailers indicating sales were lower rather than higher. Fourth, GfK??™s headline consumer confidence index rallied this month to -5 from September??™s reading of -7. Cable bids are cited around the US$ 1.8905 level. The euro was off marginally vis-? -vis the British pound as the single currency tested bids around the ?‚¤0.6670 level and was capped around the ?‚¤0.6700 figure.

CHF

The Swiss franc appreciated vis-? -vis the U.S. dollar today as the greenback tested bids around the CHF 1.2440 level and was capped around the CHF 1.2525 level. Technically, today??™s intraday high was right around the 38.2% retracement of the move from CHF 1.1285 to CHF 1.3285. Dollar offers are cited around the CHF 1.2545 level. The euro and British pound came off vis-? -vis the Swiss franc as the crosses tested bids around the CHF 1.5875 and CHF 2.3705 levels, respectively.

AUD

The Australian dollar moved higher vis-? -vis the U.S. dollar today as the Aussie tested offers around the US$ 0.7715 level and was supported around the US$0.7670 level. Stops were triggered above the $0.7700 figure, representing the 23.6% retracement of the move from $0.6770 to $0.7985. Data released in Australia today saw September private sector credit growth up 1.0% m/m and up 14.4% y/y. Mist trades believe Reserve Bank of Australia will lift interest rates next Wednesday. Australian dollar bids are cited around the US$ 0.7615 level.
CAD

The Canadian dollar gained marginal ground vis-? -vis the U.S. dollar today as the greenback tested bids around the C$ 1.1230 level and was capped around the $1.1285 level. Data released in Canada today saw GDP increase 0.3% in August after expanding 0.2% in July. U.S. dollar offers are cited around the US$ 1.1295 level.

NZD

The New Zealand dollar moved higher vis-? -vis the U.S. dollar today as kiwi tested offers around the US$ 0.6675 level and was supported around the $0.6640 level. New Zealand dollar offers are cited around the $0.6870 level.

Gold/ Silver

Gold moved higher vis-? -vis the U.S. dollar today as the yellow metal tested offers around the US$ 605.75 level and was supported around the $ 598.45 level. The pair continues to orbit the psychologically-important $600.00 figure as traders consider a slower U.S. economy, nagging global inflation pressures, and weaker oil. Silver moved higher vis-? -vis the U.S. dollar as the pair tested offers around the US$ 12.15 level and was supported around the $11.90 level.

Crude Oil

Crude oil moved lower vis-? -vis the U.S. dollar today as light, sweet NYMEX crude oil futures for November delivery tested bids around the US$ 57.68 level and was capped around the $58.50 level. Traders dumped oil on doubts that OPEC??™s output cuts will be actioned by all OPEC members. Additionally, oil is off on news that North Korea has again agreed to six-party talks regarding that country??™s nuclear ambitions. U.S. weekly inventories data will be released tomorrow.