USD Rises as Stocks Plunge on Dubai Debt Default Fears

FX Highlights

• The USD is trading higher as stocks plunge on fears about a Dubai debt crisis, Dubai World has requested a six-month delay on its debt payments generating concern about a new global financial crisis, Japan warns on FX moves and said that Japan would be open to a joint G-7 statement on currencies, threat of BOJ intervention helped to spark a USD rebound from 14 year low versus the JPY, commodity currencies hit by Dubai default worries and sharply lower price action in crude and gold, crude is trading $4 a barrel lower and the price of gold dropped by 2%, Dubai default fears and return of risk aversion are driving factors in today's trade
• Focus turns to today's release of Canada's Q3 current account
• Japan's October unemployment drops to 5.1%, October household spending rose 0.7%, October retail sales fall 0.9%, October CPI declined by 2.5% y/y, rumors are circulating that the BOJ is checking for rates, this could be a prelude to intervention, JPY trades at a 14 year high versus the USD
• German November CPI falls by 0.2%, ECB's Wellink says US living above it means, EU November economic sentiment rises to 88.8 from 86.1, November business climate index improves a -1.56 from -1.78, EUR lower
• Swiss KOF sentiment indicator improves 1.62 from 1.44 last month, CHF lower
• BOE's Posen says the UK economy has bottomed out, BOE's Bean says that growth in Q4 would not be a surprise, GBP lower
• China reaffirms its pledge to maintain loose fiscal and monetary policy
• US equity markets set to open sharply lower, European equities 0.5 % lower, Nikkei closed 301 points lower

Upcoming Events

• US - Friday, no major US economic data is due for release today
• CAN - Friday, Q3 current account will be released expected at -13.4bln compared to -11.2bln last month

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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