Good morning from the stormy sea side of the Hamburg harbour. Yesterday US Employment Index fell to 105.3 from 108.4 in September. But the USD itself was quite unimpressed and is now just a little up versus the major currencies. Today we might be able to see a jump by the publication of the USIBD economic optimism.
Market review
The Chinese 586 billion US Dollar economic stimulus package and its move toward easier credit conditions may be the most important change in Chinese fiscal and monetary policies for many years. It will oblige China to stop increasing there trade surplus to the US. Fewer Chinese purchases will put upward pressure on US interest rates and the USD as like the interest rate increased differential. The USD was nearly unchanged versus EUR and fell against the JPY.
The BoE trade - weighted index fell 10 percent since the middle of July, which could tantamount to easy the monetary conditions. The PPI report surprised on the downside and it won’t be surprising to see a soft CPI report next week, analysts said. At the moment euro-zone interest rates are higher than in the UK for the first time since EUR’s interception in 1999. EUR / GBP rose to its historical all time high at 0.8208 on Monday.
The Canadian housing starts to fell 3.1 percent in October to a seasonally adjusted rate of 211,800 units from an upwardly revised of 218,600 units in September, Canada Mortgage and Housing Corp said on Monday. The number of starts in October beat the consensus expectations of analysts who had called for 200,000 starts. Although the CAD rose against USD yesterday, because of the interdependence to the Chinese economy, said a commodity supplier.
GBP / USD
The GBP trades in a downward trend versus the USD and lost more than 2000 pips in the last 3 weeks since the end of October. But in the last week the spread of the MACD becomes very tight. Also the candles became shorter, so a trend change could be possible.
CHF / JPY
The CHF / JPY as like the GBP confirmed its downward trend. The currency pair lost more than 16 percent in the last 1 ½ months. Actual it looks like that there is no sign for a break in the trend, which could be supported by carry trades.
