- China raises benchmark deposit lending rate by 25 bps. Raises 1 year lending rate by 25 bps. Effective Wednesday
- Japan government cuts economic assessment, says economy at a standstill
- ZEW institute October German economic sentiment index -7.2 vs -4.3 in September. Slightly better than median forecast of -8.0. But current situation index 72.6, up sharply from 59.9 in September and markedly better than median forecast of 63.5. 3year high
- UK October CBI manufacturing order book balance -28 from -17 in September, much weaker than median forecast of -19
- German BGA exporters assn: Expects dollar to continue falling due to expansive US monetary policy. Worried that exchange rate problems will lead to more protectionism
- Portugal opposition sets conditions for budget deal
Bad morning for sterling, which has seen across the board losses. Cable down at 1.5770 from early 1.5885, having been as low as 1.5764. EUR/GBP up at .8815 from early .8765.
Speculation Bank of England could announce early QE is weighing on sterling. Poor CBI data (see above) didn’t help either. Also major Swiss name had sizable EUR/GBP buy order to put through. And there’s the little matter of Mervyn King speaking in Dudley tonight (18:50 GMT)
Good old Merve has something of a reputation of pulling the carpet out from under sterling. And to cap it all in late morning trade PBOC has just announced 25 bps rate hike, lending dollar some support.
EUR/USD sits at 1.3895, slightly lower from early 1.3925, having been as low as 1.3875 in wake of China raising rates. Real money has been notable buyers around the lows.
USD/JPY up at 81.50 from early 81.35 in slow trade. Interestingly, early reports had China buying the pairing this morning. Stops now seen though 81.70.
AUD/USD down at .9820 from early .9875. The move by China to raise rates has hit Aussie particularly hard on fears tighter monetary policy will slow Chinese growth prospects.