The theme to the New York trading session today was consolidation.  With a good amount of economic data due out later this week the New York market decided that it would be better to hold off on continuing the carnage from overnight.  The observance of the Veteran's Day holiday in the states also added to the muted tone of trading today.  The JPY crosses could not find a friend last night. Then the JPY crosses got a bit of relief during NY. The few traders that were active keyed in on the U.S. equity markets.  Stocks staged a bit of a rally as profit taking entered the equity markets.  This helped the JPY crosses bounce off their overnight lows and then consolidate above their lows for the remainder of the day.   We will have to be careful to think that the sell off in the carry trade has subsided.  Should they continue to trade range bound at these lower levels, it could indicate that we are just gearing up for another leg lower at some point.  Should we get further sub-prime/credit risk stories released the floodgates will most likely open again.  This will lead to risk aversion trades being put back on (i.e. sell carry and stocks). 

We could be in for a period of consolidation for the early part of this week as we have some major data release due out of the U.S. later this week.  Wednesday gets us Retail Sales for October. Thursday give us readings on CPI for October and Friday we get Net TIC flows for September.  We can expect the markets to get a good jolt should those numbers come in out of line. We will have to buckle in for those releases. Also keep your eyes and ear open for further sub-prime worries.  The markets are worked up to frenzy in regards to sub-prime. More bad news from that arena and the volatility and selling in carry trades will once again pick up.

Upcoming Economic Data Releases

  • 21:45 GMT New Zealand Food Prices for October (MoM); Expect +0.5% vs. prior +0.4% (relevance: medium)
  • 23:50 Japanese GDP for Q3 (QoQ); Expect +0.5% vs. prior -0.3% (relevance: high)
  • 23:50 Japanese GDP Q3 Annualized; Expect +1.8% vs. prior -1.2 %( relevance: high)
  • 23:50 GDP Deflator Q3 (YoY); Expect -0.3% vs. prior -0.3% (relevance: high)
  • 00:30 GMT NAB Business Confidence for October; No survey available; Prior was 7 (relevance: medium)
  • 00:30 GMT NAB Business Conditions for October; No survey available; Prior was 16