US Morning Notes - USD rebounds, Fed to tighten when economy improves

Posted by admin as Forex News

FX Highlights

• The USD is trading higher versus Europe and the JPY supported by a statement from Fed Chairman Bernanke that the Fed is ready to tighten monetary policy once the economy improves, GBP lower despite improvement in UK producer prices, EUR pressured by report of an unexpected decline in German exports, commodity currencies remain firm, CAD supported by report of new jobs growth in Canada and an unexpected drop in the Canadian unemployment rate, AUD supported by RBA rate hike speculation
• Focus turns to today’s release of US trade balance
• Canada created 30k in new jobs last month and the unemployment rate fell 0.3% to 8.4%, CAD at one year high
• Japan’s finance minister says it’s up to the BOJ to decide when to end its corporate funding program, Japan’s August core machinery orders rise 0.5%, JPY lower
• RBA watcher Kevin Rudd says improvement in Australian employment could lead to a 50bps rate hike in November, AUD higher
• UK factory gate prices rise 0.4%, GBP lower
• German trade surplus narrowed to 8.1 bln from 14.1 bln last month as exports unexpectedly decline, EUR lower
• China will continue with fiscal stimulus plans because China’s recovery is not yet on solid footing
• US same store sales posted their first gain in 14 months rising 0.6% in September compared to a 1.1% decline last month
• US 30 yr fixed mortgage rates decline to near record low at 4.87%
• Economist Roubini says there is less than a 25% chance of anther sharp contraction in the global economy
• Fed’s Lacker says he sees recovery that losses from commercial real estate and construction will be a drag on the recovery, but now is not the time to raise rates
• Congress may extend the 8k tax credit for first time home buyers
• WSJ reports that US unemployment will likely top 10% in winter and is unlikely to fall back to 6% before 2013
• Fund manager Jim Rogers sees a bubble being created in the bond market
• US equity markets set to open lower, European equities flat, Nikkei closed 184 points higher

Upcoming Events

• US - Friday, August trade balance will be released expected a -32 bln compared to -31.92 bln last month
• CAN - Friday, September unemployment will be released expected to rise 0.1% to 8.8% with employment growth expected at 5k (already released)