- Empire State manufacturing index -8.5 in October from -8.8 in September; weaker than expected
- US industrial production up 0.2% in September, capacity use rises to 77.4% from 77.3%
- Canada’s Flaherty: Europe running out of time; will be disappointing if no plan by Oct 23
- ECB bond purchases fall again; EUR 2.24 bln last week, total EUR 165 bln
- Schaeuble: Further restructuring of Greek debt needed; solidarity has limits, is linked to reforms; Europe will move forward one step at a time
- S&P cuts Madrid region, Barcelona to AA- from AA
- ECB’s Stark: Genuine economic union needed for Europe; Europe has not taken quantum leap
- Portugal reports its 2011 budget deficit was EUR 3.4 bln worse than expected; budget assumptions expects deep recession next year
- Greek austerity plan vote expected on Friday
- EFSF: No banking license for Fund; leverage will not approach EUR 2 trln: Handelsblatt
- S&P 500 falls 1.9% to 1200.86
- US 10-yr note yield falls 8.5 bp to 2.17%
- WTI falls $0.35 to $86.43; Gold falls $7 to $1672
EUR/USD reversed much of the gains seen on Friday and all the gains made early in the day on Monday, falling from 1.3914 highs in London to a low of 1.3731 in NY. Stops are seen in the 1.3720 area, traders report, and they could be a focus in early Sydney trade.
The tone for the Euro was set during the European morning as German officials sought and succeeded in tamping down expectations of a comprehensive Euro zone bailout package at this weekend’s EU summit. A more incremental package is now expected.
Risk came off the board after last week’s risk rally. Commodity currencies fell, cash commodities fell and share prices slumped, as well. Italian bank shears were particularly hard hit as contagion fears reemerged.
A sign of renewed risk aversion was the slide in EUR/JPY from 106.61 to 105.35. That sets up a bearish outside reversal on the daily charts in that cross. USD/JPY was stopped in its tracks ahead of a 77.50 barrier, part of a rumored 76.00/77.50 DNT. We fell as low as 76.60.
