<<Also relieving some downward pressure on $/JPY was the biggest
one-day loss of the year for the Nikkei, dropping more than 3%. The
euro
continued its firmer tone against the dollar after US trade data and
the
stronger than expected IFO survey in Germany. It is being held back,
however, by weakness in EUR/JPY.
In the UK, the minutes from the Sept 8 MPC meeting showed a vote of 7-2
in
favor of the surprise 25 bp rate hike. Several factors adding to
inflation
were mentioned, and the fact that consumer spending remains strong.
Along
with an upward revision to Q2 GDP (to +0.6% q/q and +1.4% y/y from
+0.5% and
+1.2%), this will keep rate hike expectations alive, and is supporting
the
pound. The minutes did note the risk of a stronger pound with a rise in
rates, and that could prevent a more aggressive rate stance. The UK's
current account deficit widened unexpectedly to the worst level since
1990.
In the US, the Beige Book could provide some insight on the Fed's next
move
but is usually not a major indicator. $/JPY will continue to be the
focus-
it was a major reason behind yesterday's declines in US asset markets.
Even
though there is some caution ahead of the G7 meeting, most predictions
have
turned bearish again, and the meeting is likely to disappoint. Summers
is
speaking today, but given his reluctance to stray from the "strong
dollar"
line, he probably won't have anything new.>> From forex report of this morning... |
