Forex Report
$
Aug. Construction Spending in the US showed an unexpected increase at 0.2%; however, Private residential construction fell for an 18th consecutive month as inventories continue to build. The USD was sold off in full force today, falling vs. all major currencies. The USD Index is down .75%, hitting a new record low at 77.723. Today’s tame PCE data led to increased speculation that the FED will cut rates in October. Oct. FED Funds Futures show an 86% chance the FED will cut 25 BPS on Halloween. EUR/USD is up .85%, hitting a new record high at 1.4278; Cable gained .9% to 2.04523; USD/JPY is down .8% to 114.72; USD/CHF is down .9% to 1.1629 and USD/Cad is now below parity at .9930.
£
The Sept. GfK Consumer Confidence Survey in the UK came in lower than expected at -7. The FT is reporting that troubled British Lender Northern Rock need to borrow and additional $10 bln in order to remain in business. December interest rate futures in the UK still factor in a full BOE rate hike before year’s end. GBP/EUR is marginally higher at 1.4337; GBP/JPY is up .15% to 234.74 and GBP/CHF is flat at 2.3795.
€
Sept. Euro-zone Consumer Confidence came in just lower than expected at -5; Industrial Confidence came in at 3 and the EU Business Climate Indicator came in lower than expected at 1.09. The EU’s Jean-Claude Jüncker addressed his concern in regards to the recent rise in EUR/USD, mentioning he would like the US to take more actions in favor of a stronger USD. EUR/JPY is flat at 1.6372 and EUR/CHF is flat at 1.66.