Forex Forecast

Risk Currencies Steady JPY fell slightly across the board as risk assets held steady on Monday during the New York session. US retail sales rose by 1.1% m/m in September beating market expectations of a 0.8% rise.

Retail Sales Eyed FX markets remained in relatively tight ranges on Monday, though there were some interesting data prints in Asia, with data out of China pointing to further stabilisation in the economy.

Macro Stabilisation Sought Trading was lacklustre during the overnight session but data out of China pointed to further stabilisation in the economy. Chinese trade data released on Saturday showed that exports grew by 9.9% in September (consensus: 5.5%, prior: 2.7%) while imports were up by 2.4% y/y, in line with expectations.

Looking For Direction EURUSD traded in the 1.285- 1.3000 range for most of last week. In the US, data continued to be positive with the University of Michigan confidence index unexpectedly jumping to 83.1 in October, the highest print since September 2007.

China Lending Data Released FX markets continued to trade in their narrow ranges on Friday with few major data releases. The September numbers for China RMB loans showed an increase by 623 bn – lower than market expectations of 700 bn.

Singapore Policy Unchanged The Monetary Authority of Singapore kept policy unchanged at its semi-annual policy meeting overnight, despite market expectations for a modest reduction in the allowed pace of currency appreciation.

USD And JPY Lose Risk sentiment improved overnight as JPY lost across the board. US jobless claims unexpectedly fell by 30k last week and the four-week average fell to 364k from 375k the prior week.

SEK Under Pressure Risk assets rebounded in the European session, taking the AUD and other risk currencies along with them. EURSEK pushed higher after soft CPI numbers (the headline rate expanding just 0.4% yoy) and comments from the Finance Minster Anders Borg that the krona is too strong versus the euro and he ‘wouldn’t be […]

Spain Downgrade Damage Done At the end of the US session, S&P downgraded Spain’s sovereign rating by two notches to BBB-. EURUSD was slow to react, but eventually fell 30 pips.

S&P Downgrades Spain S&P cut Spain’s rating by two notches from BBB+ to BBB- with a negative outlook. The ratings agency cited deepening economic recession and rising unemployment which are limiting the government’s policy options and adding to the frictions between the central and regional governments as the reasons for its decision.

Markets Consolidate A Bloomberg story citing ECB member Noyer gained a lot of attention on Tuesday. Noyer was reported as saying that the decision to give up senior status was based on a strong belief that Greece is a unique case and there will not be another restructuring in the Eurozone.