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Data/Event Risks

  • USD: Case-Shiller house prices at 13:00 is the only US release of note today. Second half of this week is critical, with claims, ADP and ISM on Thursday, then   payrolls on Friday. Otherwise, Wall st will be closed for a second day as a result of Super-storm Sandy.
  • EUR: Today’s Spanish GDP will confirm the economy is still in recession – a larger decline than expected will hurt the euro. German jobs data also critical – any signs of loss of momentum here will also weigh on the single currency.

Idea of the Day

Month-end flows appeared to favour the dollar yesterday, notwithstanding the fact that US markets were essentially closed because of Hurricane Sandy. The combination of month-end flows and risk aversion is helping the dollar at the margin; this could intensify near term.

Latest FX News

  • EUR: Very poor Spanish retail sales hurt the euro for a time yesterday, as did growing worries re the Greek resistance to the troika’s latest demands. However, solid buying was again witnessed below 1.29, and we are now at 1.2930. Ranges still very tight.
  • GBP: No independent direction despite stronger-than-expected mortgage lending. At the margin, month-end flows tended to drag the pound slightly lower yesterday.
  • JPY: Concerns regarding growth and deflation prompted the BOJ to lift their asset purchases program by another JPY 11trln overnight. The merciless yen short squeeze that commenced on Friday continued yesterday and overnight, with USD/JPY down to 79.27.