NEWS / Foreign Exchange

Worries on further subprime losses makes stocks go lower

Overnight News Bullets

• SZ CPI MoM/YoY (Oct) out at 0.9%/1.3% vs. 0.8%/1.2% expected. Prior at 0.1%/0.7%.

• UK PMI Construction (Oct) out at 57.4 vs. 59.5 expected. Prior at 60.3.

• CA Unemployment Rate (Oct) out at 5.8% vs. 5.9% expected. Prior at 5.9%, Net Change in Unemployment out at 63K vs. 12K expected. Prior at 51.1K.

• US Change in Nonfarm Payrolls (Oct) out at 166K vs. 85K expected. Prior at 96K (revised from 110K)

• US Unemployment Rate (Oct) out at 4.7% as expected. Prior at 4.7%

• US Change in Manufact. Payrolls (Oct) out at -21K vs. -15K expected. Prior at -17K.

• US Average Hourly Earnings MoM/YoY (Oct) out at 0.2%/3.8% vs. 0.3%/4.0% expected. Prior at 0.3%/4.0% prior.

• US Factory Orders (Sep) out at 0.2% vs. -0.7% expected. Prior at -3.5%.

• IT Budget Balance (Oct) out at -7.7B vs. -5.0B prior.

• NZ Labor Cost All Wages QoQ (3Q) out at 0.9% vs. 0.8% expected. Labor Cost Private Sector QoQ (3Q) out at 0.8% vs. 0.9% expected. Prior at 0.7%.

• AU TD Securities Inflation MoM/YoY (Oct) out at 0.3%/3.3% vs. 0.2%/3.0% prior.

Markets

• FX: Dollar weakness continues on credit market concers. GBPUSD pushing towards 2.0900.

• Fixed Income: JGBs rise for a second day after losses in Asian equities. Gilts also higher. US Treasuries little changed.

• Stocks: Asian equities lower, with Hang Seng down over 3% and Nikkei down 1.5%

• Commodities: Metals and crude prices ease off after last week??™s rally. Spot gold around $803 an ounce, silver $14.50 and December crude $94.97

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Today's Highlights:

This and Next Week??™s Highlights:

What's going on?

• Citigroup CEO Charles Prince resigned on Sunday. Citigroup has announced it may write off an additional $11B in subprime mortgage losses after $6.5B losses in last quarter.

• Asian stocks eased further on Monday??™s trading as credit problems offset positive sentiment of US jobs data from Friday. The losses were led large financials, with Mitsubishi Financial Group dropping for a third consecutive day.

• Gold prices are easing off lightly after 27-yr highs attained on Friday around $808 an ounce. Weakening dollar has boosted the attraction of gold as a safe haven from credit-market turmoil.

• Credit-market losses that continue to hurt the large US banks??™ profits have fuelled speculation that Federal Reserve may decide to reduce interest rates a third time year in its December??™s meeting. Dollar weakness continues with pound trading firmly above 2.08 against the dollar.

FX

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