NEWS / Foreign Exchange

European Market Update

• *** ECONOMIC DATA ***
• SZ Oct CPI: M/M 0.9% v 0.8%e || Y/Y 1.3% v 1.2%e [highest since August 2006]
• Swiss CPI exceeded consensus estimates during October reaching its highest y/y level in 14 months. Consumer prices rose on a large rise in clothing and shoes, which rose to 19.2% from 0.0% in September. The higher inflation data follows comments made by the SNB??™s Jordan yesterday noting that the SNB will act if the weak Franc threatens stable prices, adding that the he sees the risk of a sudden, strong increase in prices. Despite the strong y/y reading remained below the SNB??™s key 2.0% level. The Swiss statistics office forecasted average inflation of 0.7% in 2007 and 1.5% in 2008, still below the key 2.0% level.
• SP Oct Manufacturing PMI: 49. v 50.8 prior || Employment index posts sharpest decline since April 2005, declining to 47.9
• IT Oct Manufacturing PMI: 51.3 v 52.0e [lowest since August 2005]
• Component wise, the biggest drags on the Italian PMI were the new orders component, which declined to 52.2 from 55.0 in September, and the export orders component, which declined to 51.2 from 54.7 in September.
• FR Oct Manufacturing PMI: 50.5 v 50.0e
• The French manufacturing PMI, which was expected to decline in October, remained unchanged from September??™s reading at 50.5. Component wise, output declined to 50.7 fro m52.0 in September, while most of the other components posted gains. Contrary to the Italian manufacturing PMI, the French PMI was buoyed by new orders, which rose to 51.1 from 48.6 in September, as well as export orders, which rose to 51.4 from 48.9 in September.
• GE Oct Manufacturing PMI: 51.7 v 53.5e [Lowest since September 2005] || New orders component posts first decline since August 2005
• The German manufacturing PMI declined to its lowest level since September of 2005 as new orders dropped to 49.1 from 53.4 in September, export orders declined to 51.0 from 55.4 in September, and quantity of purchases declined to 49.8 from 54.3 for the same periods.
• EU Oct Final Manufacturing PMI: 51.5 v 51.5e
• The final reading on the Euro-Zone manufacturing PMI for the month of October was in line with the preliminary reading at 51.5. Component wise, there were no significant changes from the preliminary reading. Compared to September??™s readings, output declined to 52.6 from 55.5, while new orders declined to 50.7 from 52.2, and backlogs of work declined to 48.1 from 50.3.
• While all readings remained above the breakeven mark of 50, indicating continued expansion in the manufacturing sector, October PMI figures showed that the manufacturing sector is growing at a slower pace than is has in well over a year as the strong Euro began to weigh down on export orders, and as high energy prices have began to weigh down slightly on European economies in general.
• UK Oct Construction PMI: 57.4 v 59.5e
• UK Q3 Personal Insolvencies: 26,072 (-5.0% y/y)
• *** SPEAKERS/COMMENTS ***
• SZ Stats. Office: Forecasts 2007 avg. inflation of 0.7%
• SZ Stats. Office: Forecasts 2008 avg. inflation of 1.5%
• FR Jouyet: Dialogue between the Eurogroup and the ECB has calmed down
• FR Jouyet: The weak Dollar risks lasting
• FR Jouyet: The strong Euro helps to cap oil-linker inflation risks
• FR Jouyet: Quarrels with the ECB over interest rates are over
• ECB Mersch: Strong Euro is a result of the good growth outlook and balanced accounts
• ECB Mersch: Strong Euro is a result of the good growth outlook and balanced accounts
• ECB Mersch: Dollar only affects a small part of EMU trade
• ECB Mersch: It is normal for the US economic slowdown to be reflected in the FX rate
• *** FIXED INCOME/FX/COMMODITIES/ERRATUM ***
• Dollar index falls to a new all-time low of 76.451
• Ahead of non-farm payrolls in the US the USD is weaker on circulating chatter that discrepancies in regional-state employment reports, and Friday??™s official release of non-farm payrolls could results in a significant downward revision to September??™s reading.