• Trichet: Forex volatility an enemy; US needs to pursue strong USD policy; not campaigning for international use of the euro
  • Rumored Qatari bid for UK’s Sainsbury’s denied
  • US weekly jobless claims fall to 514,000 from 524,000; Continuing claims dip below 6 mln
  • US CPI rises 0.2% in September, as expected
  • Empire State Manufacturing survey highest in 5 years, 34.6 from 18.9
  • Greenspan not worried by dollar weakness; is worried by deficits
  • Philly Fed survey dips to 11.5 in October from 14.1 in September
  • ECB’s Mersch: Forecasts could be revised higher
  • CEO confidence rises: Business Roundtable
  • Pressure builds for Trichet, Almunia to appeal to China to revalue CNY: Dow Jones
  • Fed’s Fisher: Now not the time to hike rates; big slack in economy
  • Oil approaches $78 as gasoline inventories drop; Gold stalls, dips to $1050
  • S&P closes up 0.4% at 1097; 10 year note yield rises to 3.46%
  • Continued strong earnings after the bell from Google and IBM

The US inherited EUR/USD on its lows for a change, as Trichet warned that currency volatility is “an enemy”. Prices dipped briefly below the 1.4850 level to 1.4844 but soon rebounded as downward pressure on EUR/GBP that was seen during the London morning relented a bit in the afternoon. EUR/USD eventually worked its way to an afternoon high of 1.4958 before it lapsed into a choppy consolidation.

USD/JPY rallied to test exporter offers in the 90.80 are twice but was unable to overcome them. Firmer US rates and a short-covering bid of enormous proportions in GBP/JPY helped underpin the USD/JPY.

Cable stalled ahead of 1.6300 in London but dips were relatively shallow as the market tries to cover its huge short. Dips were shallower and shallower as the session wore on, a sign of a market in need of pounds. 1.6210 was the pullback low in the ,orning, followed by higher lows at 1.6235/40 and 1.6260.

Commodity currencies were caught in a crosswind today. Gold gave ground while oil and the CRB raced higher. USD/CAD rallied as high as 1.0372 on short-covering while AUD consolidated below 0.9200 for much of the afternoon.