Economic Data

  • German Import prices for August +1.3% m/m from -0.9% expectations +0.6%

-10.9% y/y from -12.6% expectations -11.6%

  • Spanish Retail Sales for August -4.0% y/y from -4.9% expectations -4.5%

CPI for Sept -1.0% y/y from -0.8% in August, market expectations -0.8%

  • Italian Business Confidence fell in Sept. to 74.0 from 74.4 (revised from 74.8) in August an unexpected drop from the figure of 75.8 the market had been expecting.
  • UK Q2 final GDP -0.65 q/q revised as expected from -0.7%
  • UK Mortgage Approvals increased as expected from 52,317 to 52,404
  • UK Net lending to individuals in August was the highest since Feb. to + GBP 1.009 bio from – GBP 0.203 bio.
  • UK August M4 Money Supply was +0.1% m/m +12.5% y/y as expected
  • UK Current account deficit widened in August more than expected to GBP 11.424 bio, expectations of a deficit of GBP 7.8 bio from a deficit of GBP 4.145 bio in July revised from GBP 8.54 bio.
  • Belgian CPI in Sept. -0.26% m/m from +0.3% and -1.19% y/y from -0.78%.
  • UK CBI Distributive Trades survey unexpectedly up 3 points in Sept. from -16 in August versus expectations of a drop of 14 points.

Comments

  • UK opinion polls show the Labour Party 15 points behind the Conservatives and level with the Liberal-Democrats. Prime Minister Gordon Brown speaks to his Party at their annual conference today.
  • Japans Finance Minister Gyohten says that he doesn’t see the Yens rise as a sharp move nor sees “big turbulence” in the FX markets.
  • ECB Board member Lukanen says that non-standard monetary policy measures have been vital but have unwelcoming side-effects. Economic growth in developed economies will remain slow in 2010 and 2011. On world growth he says it will be tame in 2010 and import demand will increase in developed countries toward the end of 2011. The rebound in oil and other commodities he expects in 2010 and 2011 to be at a more moderate rate. He believes that the most difficult phase of the economic crisis is now over.
  • Euro group Chairman Juncker says an exit strategy should be put in place as soon as possible and be ready to be implemented as soon as the recovery takes root. He also see small growth in the Euro zone in 2010 and that that potential growth will hover around 1.5% from 2010 to 2020.
  • German DIW Economic Institute says that they see German Q3 GDP growth at 0.7% q/q
  • ECB Board member Constancio says that the economic crisis shows “some signs of easing” and that there is major uncertainty about the global recovery magnitude and sustainability. The risk to growth could come from a possible premature withdrawal of the budget stimulus.
  • Russian Prime Minister Putin says that Russia will not sacrifice macroeconomic stability but will stick to its conservative fiscal policy and he expects that budget revenues will be greater than expected both this and next year. He adds Russian inflation will be below 11% this year.
  • BNP Paribas said it will raise Euro 4.3 bio in a rights offer to help repay government funds. BNP Paribas is offering existing investors 107.6 million shares at Euro 40 each, or 29 percent below yesterday’s closing price, the Paris-based bank said today. The company will repay Euro 5.1 bio it received from the French state as well as Euro 226 million of interest, it said.

Currencies

  • Euro after an initial rise from 1.4626 to 1.4645 on Asian profit taking prior to the European opening the Euro has been steadily sold off with stops triggered through the 1.4570 to 1.4560 level taking the currency to a low of 1.4557 before recovering back above 1.4580. It then moved lower as sterling recovered against the Euro taking the Euro to a session low of 1.4535.
  • Dollar-Yen opening around the 90.00 level topped out at 90.10 and bottomed out an hour later at 89.62 as sterling-yen was driven by a UK clearer from 143.30 to 142.15. Both dollar and sterling against the yen consolidated around those lows before the same clearer (?) took profit in sterling yen and on the back of better than expected UK economic data took the rates back to a high of 143.80 and dollar yen to 90.08
  • Sterling opened around 1.5925 drifted higher on Asian squaring to 1.5955. The currency forced lower on the Sterling yen move to 1.5845. It then traded in a 1.5845 – 1.5865 range following mixed UK economic data and dropped to a session low of 1.5826 on the UK parliamentary polls and speculation as to what Gordon Brown would say in his speech at the Labour Party Conference in a couple of hours. Better than expected economic data say buyers of sterling emerge and coupled with profit taking saw sterling higher against the dollar, yen and euro with fund managers involved on a break of the 0.9170 level taking cable to a session high of 1.5986.

Ranges

  • EUR / USD 1.4535 – 1.4645
  • USD / JPY 89.62 – 90.10
  • GBP / USD 1.5828 – 1.5986
  • USD / CHF 1.0313 – 1.0402
  • AUD / USD 0.8710 – 0.8760
  • NZD / USD 0.7155 – 0.7225
  • GBP / JPY 142.05 – 143.80
  • EUR / GBP 0.9108 – 0.9208

Stock Markets

  • Nikkei closed at 10,100-20 higher by 90.68 (+0.91%)
  • Hang Seng closed at 21,013-17 higher by 424-76 (+2.06%)
  • Kospi closed at 1,690-05 higher by 14.5 (0.87%)
  • Shanghai Composite Index closed at 2,754,540 lower by 8,985 (-0.33%)