US Morning Notes - USD higher, IMF warns of sluggish global growth

Posted by admin as Forex News

FX Highlights

• The USD is trading higher Tuesday supported by a dip in risk appetite as the global equity market rally stalls in reaction to a statement from the IMF that the global economic recovery may be sluggish ,ECB President Trichet calls on US to confirm strong USD policy, GBP supported by report of higher than expected UK consumer inflation, AUD pressured by the release of RBA minutes which indicate that the RBA may pass on the December rate hike, crude and the price of gold trade lower as the USD recovers and investors liquidate some risk positions, risk appetite falls with weaker equity markets
• Focus turns to today’s release of US PPI, industrial production, capacity use and NAHB index
• Japans September METI tertiary index falls 0.5%, Japanese officials expressed concern about deflation and suggest additional stimulus may be needed to boost growth, JPY lower
• RBA minutes state that pace of rate hikes open to question, further gradual rate rises likely, AUD rally may constrain growth and inflation, AUD lower
• EU September trade surplus widens to 3.7bln from 2.3bln deficit last month, EUR lower
• UK October CPI rises 0.2% m/m and 1.5% y/y, GBP mixed
• Swiss September retail sales fall 1.6% compared to 1% decline last month, SNB’s Roth says it will take time for Swiss economy to emerge from recession and he sees price stability in Switzerland in the coming years, CHF lower
• Fed Chairman Bernanke says that rising unemployment and tight lending conditions makes it possible for future setbacks in the US economy, he pledged to keep interest rates low and sees moderate recovery in 2010, Bernanke also said that Fed policy would help ensure that the USD is strong and a source of global financial stability
• Fed Fisher says US Q3 GDP was probably closer to 2.5% than the original report of 3.5%
• The head of the IMF says that a basket of currencies may eventually replace the USD
• US equity markets set to open lower, European equities 0.5% lower, Nikkei closed 61 points lower

Upcoming Events

• US - Tuesday, October PPI will be released expected at 0.1% compared to -0.1% last month along with October capacity use expected at 70.8 compared to 70.5 last month, October industrial production expected at 0.4% compared to 0.7% last month and November NAHB expected at 19 compared to 18 last month
• CAN - Tuesday, no major reports are due for release today