Here’s a helpful site for when we begin trading of interest rate expectations again. It allows you to get a read on the odds of a Fed move based of the Fed funds futures contracts. It implies a 100& chance of a 25 bp cut from the Fed at the next FOMC meeting.

All things considered, EUR/USD holds up pretty well. For more than a week now we’ve heard almost nothing but massive selling of EUR/USD from US real money accounts. You know, mutual funds, pension funds, endowments; those sorts of guys. They continue to sell this afternoon, just knocking the pair down to 1.3388 before a pop in equities helped boost the pair back up over the figure. The fact that the market has absorbed billions of euros in the last week is pretty impressive, when put into perspective. It also suggests that whomever is absorbing all these euros may be happy to let them go if we can rebound anywhere toward the 1.37/1.38 area.

The NAHB sentiment index fell to a record low of 14 in October. I can’t imagine why Us homebuilders don’t have a warm, fuzzy feeing at the moment…

Minneapolis Fed president Stern is one of the sharper guys at the helm a regional Fed. That makes his comments on the outlook for the economy all the more chilling. He says the economy  will stay soft for the next one to three years and that the downturn will be deeper than the last recession of note back in the early 1990s. Just what the man on the ledge needs to hear…

Italian finance minister Tremonti continues to press his “new Bretton Woods” idea but questions whether the dollar should be the reference currency. What would replace it? The Euro, the basis of which has come under question during the financial crisis? I would think not.

The Europeans are tying to drive home a “new world order” as a result of the credit crisis. Sadly, they will probably get one if the US opinion polls are correct. Secretary Krugman will see to it…

Stocks are higher supposedly on Microsoft’s continued interest in pursuing Yahoo. They were unable to come to terms at $37. perhaps they might feel differently with the stock at $13..

EUR/JPY is firmer with stocks. Offers remain in the 137.00/20 area with Japanese exporters rumored to be in the mix…

Stocks have come off their losses, helping spark a short-covering bounce in EUR/JPY.  Moves are relatively moderate, suggesting speculative position-taking remains pretty limited. When speculators take to the sidelines, they can’t get squeezed out of ill-considered positions. Most positions in markets like these are probably ill-considered, if you ask me.

Liquidation remains the major play with gold the latest victim. Even relative strong performers are suffering against the present backdrop as even winners have to be sold in an environment where many leveraged accounts gave to raise cash to meet redemptions or margin calls.

They are cheap for a reason: commodities are pricing in a sharp global recession. Freight rates have collapse, down 85% from their highs earlier this year and the commodities themselves are now having a hard time finding a home. This does not even take into account the need for leveraged funds to pull out of markets they only entered in the last year or two. Don’t try and catch a falling knife!

A big build in crude inventories has oil futures trading on the $70-handle. Small consolation to those of us who’s college and retirement accounts have been vaporized in the last month, but it is an important counterweight to help offset the economic drag from the credit crisis.

EUR/USD is only modestly lower after the late-London fixing, trading at 1.3400. Stocks are diving once again, though, down 300 points.

The 15:00 GMT London fixing is expected to see another wave of EUR/USD sales. Asset managers are the heaviest users of the fixings and they have been the steadiest group of sellers of EUR/USD for the last week, a sign that US investors continue to yank billions out of overseas equity markets, in our view. EUR/USD trades at 1.3398.

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