USD Firms on Concern about German West LB Bank

FX Highlights

• The USD is trading mixed to higher supported by a dip in risk appetite sparked by report of S & P's concern over capital shortfalls at some large global banking firms and worries about German banks, FAZ reports that Germany's West LB bank may be allowed to become insolvent, news about German bank troubles was partly offset by stronger German IFO, BOE Governor King warns about UK debt, Swiss UBS consumption index shows improvement, rift between the Japanese government and BOJ grows, Japanese government officials accuse the BOJ of being asleep at the wheel over deflation, commodity currencies pressured by a dip in risk appetite, USD is also supported by speculation that Q3 GDP will be revised down because the widening of the US trade deficit
• Focus turns to today's release of US Q3 GDP, Case Shiller home price index, consumer confidence and FOMC minutes
• Japan's retail investor index falls to an eight-month low at -57, Japan's Finance Minister Fujii says Japan needs to monitor the stock market, the Japanese government says the BOJ is asleep at the wheel on deflation, JPY higher
• Australia's September confidence board leading indicator rose 0.3%, AUD lower
• EU September industrial orders rose 1.5%, German November IFO improved to 93.9 from 91.9 last month, German bank West LB may be allowed to become insolvent, EUR mixed
• Swiss Q3 payrolls rose to 3.96mln from 3.94mln last month, UBS October consumption index improved to 0.87 compared to 0.67 last month, CHF higher
• BOE Governor King warns that the longer it takes to reduce UK budget deficit the greater the risk to the UK debt rating, BOE's Posen says the central bank is coming near the end of quantitative ease,GBP lower
• Russia cut its overnight rate to a record low 9% to boost output and limit ruble strength, the Russian central bank says lending remains at a low-level
• Economists predict that job losses will stop in early 2010 but hiring will be slow to emerge and consumer spending weak
• US equity markets set to open mixed, European equities 0.25% higher, Nikkei closed 96 points lower

Upcoming Events

• US - Tuesday, preliminary Q3 GDP will be released expected at 2.9% along with November consumer confidence expected unchanged at 47.7, September Case Shiller index expected -9% compared to
  -11.3% and the FOMC minutes for the November policy meeting
• CAN - Tuesday, no major Canadian economic data is due for release today

By Michael J. Malpede

Easy Forex

Michael J. Malpede is Chief Market Analyst with Easy-Forex® and has previously been featured on Bloomberg TV, Bloomberg radio, Reuters, MarketWatch, Wall Street Journal, Chicago Tribune, Chicago Sun Times, Toronto Star and Nikkei press. In analyzing the markets, he draws from 29 years of Foreign Exchange Research as a Foreign Exchange Analyst.

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