- New Zealand hit by earthquake
- UK Mortgage Lending at record low
- Nikkei closed, Europe up 0.705
- Oil near $100/bbl
- Gold at $1612/oz.
- GBP BBA Loans for House Purchase ( NOV ) 34.7K vs. 35.8K
- GBP Index of Services 0.2% vs. 0.3%
Event Risk on Tap
- USD Durable Goods Orders ( NOV ) expected at 1.3%
- USD Durables Ex Transportation ( NOV )
- USD Personal Spending ( NOV ) expected at 0.4%
- USD New Home Sales (MoM) ( NOV ) expected at 1.3%
- CAD Gross Domestic Product (MoM) (OCT)
- USD/JPY drifts back to 78.00
- AUD/USD 1.0180 caps as EUR/AUD flows dominate
- GBP/USD weak housing data sends cable to 1.5680
- EUR/USD rally to 1.3100 runs out of steam
A very quiet night of trade ahead of the long holiday weekend as an early EUR/USD rally ran out of steam near the 1.3100 and risk FX traded mildly lower as the session progressed. Currency markets continue to grapple with the question of whether the ECB LTRO will prove to be an effective tool for recycling capital into the region's sovereign debt market or whether the banks will simply sit on the money to use for their short term financing needs. Today, shares of most of the Italian banks were lower on skepticism over the LTRO policy. We continue to believe that EUR/USD remains vulnerable to a run on the 1.3000 level as the market comes to a conclusion that the sovereign debt pressures will remain in place.
On the economic front, the calendar was very sparse with Asia on holiday and Europe clearly operating at half staff. In UK the eco data missed its mark as mortgage approvals fell to their lowest level on record and growth in the services sector slowed materially. UK mortgage approvals printed at 34.7K versus 35.8K eyed. Unsecured borrowing fell as well to 6.78B versus 7.1B the period prior. UK consumers continue to retrench in the face of financial turmoil in the markets and their behavior is having a negative impact on the services sector as a whole.
UK Services growth fell sharply in October rising only 0.2% versus 0.7% the month prior. Banking, computer services and telecommunications were sectors that saw the greatest declines as business activity slowed to a crawl. Four out of the five subcomponents within the business services report fell in October suggesting that UK economic growth may be weaker than the market believes. GBP/USD slipped to 1.5665 in the aftermath of the report after rallying to 1.5710 earlier in the session. The pair continues to face resistance in the 1.5700-1.5750 region and if the data does not improve may slide towards 1.5500 at the start of the new year.
In North America today the calendar carries US Durable Goods data and Personal Income and Spending reports. The market anticipates a robust rebound to 1.3% from -0.7% the month prior and looks for Personal spending to improve to 0.3% from 0.1%.The news may have only a minimal impact on trade unless it is well outside of expectations and with market volumes likely to be low price action could be very quiet as traders close up shop for the holiday. The key determining factor may be whether market participants will want to hold risk through the long holiday weekend and equity flows will likely govern FX action for the rest of the day.
|USD||13:30||8:30||Durable Goods Orders ( NOV )||1.3%||-0.7%|
|USD||13:30||8:30||Durables Ex Transportation ( NOV )||0.7%|
|USD||13:30||8:30||Personal Spending ( NOV )||0.4%||0.1%|
|USD||15:00||10:00||New Home Sales (MoM) ( NOV )||1.3%||1.3%|
|CAD||13:30||8:30||Gross Domestic Product (MoM) (OCT)||0.2%|