Economic Data

  • German Sept. ifo Business Climate index 91.3 from 90.5 in August, expectations 92.0
  • German Sept. ifo Current conditions 87.0 from 86.2 in August (revised from 86.1). expectations 87.6
  • German Sept ifo Expectations Index 95.7 from 95.0 in August, expectations 96.5
  • Italian July world trade surplus Euro 4.107 bio from Euro 2.074 bio in July 2008
  • Italian July EU trade surplus Euro 2.397 bio from Euro 3.695 bio the previous year

Speakers

  • Gyohten, Ex Japanese Minister of Finance, says that Asian economic integration could lead to a reduced role for the dollar but it is not aimed at excluding the dollar from the region. A reduced role however could US policy over the long term. He adds currencies shouldn’t be manipulated to achieve specific economic goals but officials have to respond if short term currency moves are abnormal.
  • German Chancellor Angela Merkel says that the Pittsburgh G20 meeting will be decisive on financial market regulations and that it’s on a good path but there is a risk that the momentum will fade. She adds that the G20 forum should continue to grow in importance. She also says that the G20 should not come up with new themes at the expense of the financial market regulations. Global imbalances are a key theme and that currencies should be a part of that discussion. Sustainable growth and not growth in and out of itself should be a priority.
  • ECB’s Nowotny says that banks that are “too big to fail” need special rules with stricter supervision and that these banks should be required to hold extra capital as “insurance premiums”.
  • ECB’s Weber said that he expects G20 to agree on long term changes to financial structures and that discussion on top limits on managers bonuses is not expected to be high on the G20 agenda. He added that he expects this summit to achieve more than the previous two G20 meetings.
  • UK Chancellor of the Exchequer, Alistair Darling, in an interview prior to his departure from London to Pittsburgh for the G20 summit suggest that countries that have shown poor financial oversight, don’t comply to global standards in financial reporting and hide away financial transaction in “safe/tax haven” countries should be blacklisted.
  • Bank of England Governor Mervyn King says that UK growth may be beginning to pick up and is well placed for recovery. People however should not get too carried away as growth is very small after a very big contraction. The weaker pound is helping the necessary rebalancing of the UK economy in regard to exports. He impressed the need for a credible plan on how to reduce the UK budget deficit and if the UK economy remains weak it will affect the pace of fiscal tightening.
  • Ifo’s Abberger says that there is even a balance between optimists and pessimists over the 6 month outlook. He says it’s questionable if recent economic recovery is self sustainable or robust, although recovery may not be sustainable as stimulus packages expire and joblessness rises. He says that the ECB does not need to change interest rate from 1% and that the current exchange rate is not a problem for companies now but that could change. Companies are still considering job cuts but they are not so skeptical about exports and they are expecting further support from foreign demand. The German election this Sunday did not play a big role in September’s Confidence Survey.

Currencies

  • Euro dollar has moved higher through the session on the back of buyers of Euros against sterling and taking out small stops around 1.4770 before posting a high of 1.4787. Stops rumored to be just above in the 1.4800 region.
  • Dollar-Yen gradually sold off through the session filling the buy orders through 9060-90.70 area as it went looking like it might test the barrier option at 90.00 but the move was thwarted making a low of 90.37. The dollar has since strengthened and currently trades in the 90.60 region.
  • Sterling having traded at the top of the session range prior to the London opening before selling of sterling by a UK clearer and general selling following Mervyn Kings comments saw the pound initially fall to 1.6200, where bids temporarily supported the currency, before fresh selling saw it fall further to a low of 1.6384. Against the Euro the same UK name reportedly was once again a seller of the sterling causing the cross to jump from 0.9025 to 0.9065 in seconds and then forage further to a session high of 0.9135.

Currency Ranges

  • EUR/USD 1.4710 / 1.4787
  • USD/JPY 90.37 / 90.97
  • GBP / USD 1.6168 / 1.6384
  • USD / CHF 1.0210 / 1.0277
  • AUD / USD 0.8700 / 0.8748
  • NZD / USD 0.7190 / 0.7230
  • EUR / GBP 0.8990 / 0.9135

Stock Markets

European stock markets have recovered somewhat following disappointing German ifo data.

  • Kospi in Seoul closed at 1,693-88 down 17-59 (-1.03%)
  • Nikkei 225 closed at 10,544-22 higher by 173-68 (+1.67%)
  • Hang Seng closed at 21,050-73 lower by 544-79 (-2.52%)
  • Shanghai Composite closed at 2,853,554 higher by 10,833 (+0.38%)
  • FTSE 100 currently at 5,116-73 lower by 22.64 (-0.44%)
  • CAC 40 currently at 3,805-74 lower by 16.05 (-0.42%)
  • DAX currently at 5,679-30 lower by 22.75 (-0.4%)