The buck extended gains modestly against the majors in London trading as dovish Euro-zone data helped nudge the common currency across the pond lower. Euro-zone 3Q GDP fell -0.2% as expected in what was the second consecutive quarterly decline, which makes a recession in the Euro-zone official -- in case anyone had any doubts. Consumer prices meanwhile remained subdued as the core measure (excluding food and energy) was steady at a 1.9% annual rate. Thus the argument from the ECB that inflation continues to be a problem gets weaker and further sharp rate cuts become even more probable.
EUR/USD slipped a modest -25 pips and was sitting near the 1.2690 area ahead of the NY session. JPY crosses headed lower as the global rally in equities looks to be coming to an end once the US opens for business. USD/JPY slipped about -40 pips to the 96.50 area while EUR/JPY shed -75 points into the 122.40/50 zone.
US equity futures are -1.5% in the red this morning and US retail sales out at 830ET could provide some more downside here. The market is looking for an ex autos result of -1.2% for October but the risk of a weaker than expected print is high. Retailers reported very weak 3Q earnings and commensurately bleak outlooks for the holiday shopping season. Meanwhile, gasoline demand continues to look extremely weak even on the back of sharply lower prices. A much worse than expected number should see risk aversion pick up speed, which would see the JPY crosses take a hit on the follow. Stay tuned!
Upcoming Economic Data Releases (NY Session) Prior Estimate
- 11/14/2008 13:30 GMT Bernanke, Trichet Speak at ECB Conference in Frankfurt
- 11/14/2008 13:30 GMT CA Manufacturing Shipments MoM SEP -3.70% -1.50%
- 11/14/2008 13:30 GMT CA New Motor Vehicle Sales MoM SEP -2.30% 1.00%
- 11/14/2008 13:30 GMT US Import Price Index (MoM) OCT -3.00% -4.40%
- 11/14/2008 13:30 GMT US Import Price Index (YoY) OCT 14.50% 8.20%
- 11/14/2008 13:30 GMT US Advance Retail Sales OCT -1.20% -2.10%
- 11/14/2008 13:30 GMT US Retail Sales Less Autos OCT -0.60% -1.20%
- 11/14/2008 15:00 GMT US U. of Michigan Confidence NOV P 57.6 56.2
