NEWS / Foreign Exchange

USD still weakening ahead of FOMC Decision tonight

Today's US GDP figures and FOMC rate decision will cause a lot of volatility.

Overnight News Bullets

• French Housing Starts/Permits YoY (Sep) out at 12.9%/3.2% vs. 13.3/0.1% expected.

• Swedish Riksbank Interest Rate out at 4.00% (unchanged) as expected.

• Swedish Retail Sales MoM/YoY (Sep) out at 2.6%/9.9% vs. 0.9%/7.5% expected.

• German Unemployment Change (Oct) out at -40K vs. -30K expected.

• German Unemployment Rate (Oct) out at 8.7% as expected.

• Swiss UBS Consumption Indicator (Sep) out at 1.992 vs. 1.932 prior.

• Canadian Industrial Product Price MoM (Sep) out at -0.9% vs. -0.4% expected.

• Canadian Raw Materials Price Index MoM (Sep) out at -0.9% vs. 0.7% expected.

• US S&P/CaseShiller Home Price Index YoY (Aug) out at -4.4% vs. -4.2% expected.

• US Consumer Confidence (Oct) out at 95.6 vs. 99.0 expected.

• ABC Consumer Confidence (Oct 28) out at -15 vs. -17 prior.

• Japanese Nomura/JMMA Manufacturing PMI (Oct) out at 49.5 vs. 49.9 expected.

• Australian HIA New Home Sales MoM (Sep) out at 9.9% vs, -8.6% prior.

• Australian Building Approvals MoM/YoY (Sep) out at 6.8%/4.2% vs. -1.7%/-0.0% prior.

• Australian Private Sector Credit MoM/YoY (Sep) out at 1.2%/15.9% vs. 1.5%/16.2% prior.

• Japanese Labor Cash Earnings YoY (Sep) out at -0.5% vs. 0.2% expected.

• Japanese Overtime Earnings YoY (Sep) out at 1.4% vs. 1.2% prior.

• NZ NBNZ Business Confidence (Oct) out at -12.9 vs. -26.5 expected.

• BoJ Target Rate out at 0.50% (unchanged) as expected. Dovish semiannual outlook report.

• Japanese Housing Starts (Sep) out at -44% vs. -31.2% expected.

• Japanese Construction Orders YoY (Sep) out at 720K vs. 854K expected.

• UK Nationwide House Price sa YoY (Oct) out at 9.7% vs. 8.5% expected.

• German Retail Sales MoM/YoY (Sep) out at 2.3%/-2.2% vs. 0.8%/-0.6% expected.

Markets

• FX: USD making new lows. JPY about unchanged. European currencies edging higher.

• Fixed Income: 10-year contracts lost momentum, seeing some consolidation.

• Stocks: European and US session weak. Tech stocks still looking strongest. Nikkei up 0.52%.

• Commodities: Still looking strong on USD weakness. Crude Oil @ 89.61. Gold @ 783.53. Silver @ 14.21.

O/N Data Heat map:

Calendar

Today's Highlights:

This and Next Week??™s Highlights:

What's going on?

• Traders are largely betting that Federal Reserve will reduce thebenchmark rate by quarter-percentage today. This has kept the dollarwell offered, with EURUSD hitting another all-time high at 1.4455 andcable climbing over 2.07 for the first time in 26 years.

• Equity markets were largely subdued ahead of FOMC rate decisiontoday. Caution before the rate call also taxed the commodity prices, asboth crude and oil prices continued to edge slightly lower.

• Big European banks gave mixed signals as Deutsche Bank reported31%  profit growth in Q3 while UBS stated that subprime relatedwritedowns may continue into Q4. In the US, Merrill Lynch ousted CEO Stan O??™Neal after a record loss.

• Bank of Japan kept benchmark rates at 0.50% as largely expected butcut economic growth forecast and abandoned prediction for an increasein consumer prices this year. Bank??™s growth forecast for this year hasbeen scaled down to 1.8% from 2.1% predicted 6 months ago.