• Canadian GDP rises 0.3% in August versus 0.2% consensus forecast
  • Italian yields spike toward crisis highs posted in August; trades at 6.15%
  • Portugal asks for more flexibility in EU-I<F bailout terms
  • MF Global files for bankruptcy after bad Italian bond bet
  • Chicago PMI 58.4; below expectations for 59.0
  • EFSF bond deal to fund Irish bailout downsized due to lack of demand
  • Dallas Fed index improves to 2.3 in October from -14.4 in September
  • Moody’s: Sweden AAA and outlook stable; based on very high financial strength
  • French PM to discuss Greek deal with banks on Wednesday
  • IMF says CAD “on the strong side” relative to fundamentals; Accomodative monetary policy appropriate
  • Greek PM calls for referendum on latest debt deal; in addition, confidence vote set for Friday
  • US Treasury announces higher borrowing needs as revenues fall, spending increases
  • Greek deficit widens 15% despite austerity in first 9 months of 2011
  • S&P 500 falls 2.5%
  • US 10-year note falls 20 bp to 2.12%
  • WTI falls 0.90 to $92.46; gold falls $28 to $1716

EUR/USD fell hard throughout the US session, essentially unwinding all the gains seen late last week on supposed euphoria over the Greek debt deal. Helping undermine the euro was the bankruptcy filing by MF Global on the back of a bad bet on Italian debt. Softish Chicago PMI, widening Italian spreads despite the EU bailout being barely 4 days old and news of a Greek referendum being called to ratify the latest debt deal (what are the odds of that passing?) all helped spark a reversion to risk aversion,sending stocks and bond yields lower and the dollar higher.

GBP was a major outlier today, rallying forcefully at month-end, traditionally a seasonal weak period for the pound. The slide in EUR/GBP triggered very large stops below 0.8670 and sent us below 0.8600 late in the day. The selling was so intense, some wondered if it could some how have been linked to the MF Global liquidation.Cable jumped to 1.6167 in frantic trade before retreating to close at 1.6085.

USD/JPY was little moved in the US amid talk of Japanese semi-official names buying the pair on the dips. There is a school of thought that today’s intervention was designed to help gussy-up the balance sheet of Japanese corporates at month-end.

EUR/CHF fell to 1.2140 amid renewed European sovereign debt concerns, no doubt causing a few of the gnomes of Zurich to feel their collars tighten just a tad…