NEWS / Foreign Exchange

Credit Risk Creeeping Back in Monday Morning in Europe

Overnight News Bullets

• AU PPI Q3, out at 1.1% vs 0.9% exp. YoY out at 2.4% vs 2.1% exp.

• UK GDP Q3, out at 0.8% vs 0.7% exp. YoY out at 3.3% vs 3.1% exp.

• CA CPI Sep, out at 0.2% in line with exp. YoY out at 2.5% in line with exp.

• CA Core CPI Sep, out at 0.4% vs 0.2% exp. YoY out at 2.0% vs 1.9% exp.

• JN Supermarket Sales Sep, YoY out at -1.0% vs a prioor reading of -0.5%.

• NZ Credit Card Spending Sep YoY, out at 9.5% vs a prior reading 8.4%.

Markets

• FX: Unwinding of carry trades continued with USDJPY gapping in ealry Asian trading. USD remains weak.

• Fixed Income: Treasuries and Bunds continues its rally as investors look for more safe assets.

• Stocks: US stocks were sold-off heavily Friday with S&P 500 cash taking out and closing below 1500.

• Commodities: Crude oil seeing massive selling interest above $90 per barrel. Precious metals taking a large hit through Asia.

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Calendar

Today's Highlights:

This and Next Week???‚¬?„?s Highlights:

What's going on?

• G7 meeting ended with statements that housing slowdown in the US will damp global growth, pushing the carry trades to be unwound and yen to rise to 6-wk high against the dollar, hitting 113.20 on Monday???‚¬?„?s trading.

• The G7 meeting, however, avoided an explicit warning on the weakness of US dollar, effectively giving a green light to continued dollar selling. The dollar has subsequently hit yet another low against euro at 1.4350.

• Asian stocks fell the most in 2-month period on concern that credit crisis will cause a slowdown in global activity. Large exporters such as Toyota and mining companies took the worst brunt of broad losses in Asian indexes.

• Crude oil fell for a second day on speculation of contracting economic activity. November contract fell over 1%, reaching a low of $87.61 a barrel on Monday???‚¬?„?s trading.

FX

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