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Trade the News - European Market Update: Everyone Chimes Dollar Concerns Continue to Emerge
European Market Update: Everyone Chimes Dollar Concerns Continue to Emerge
Â· *** ECONOMIC DATA ***
Â· FR Q3 Preliminary Non-Farm Payrolls: 0.2 v 0.3%e || Prior revised from 0.3% to 0.4%
Â· FR Q3 Preliminary Wages: 0.7% v 0. 7%e
Â· SP Sep Factory Orders 2.8% v 1.0% prior || Prior revised from 1.0% to 1.4%
Â· SZ Sep Adjusted Real Retail Sales: 7.1% v 4. 2%e
Â· This was the only economic data released that was remotely interesting on this quiet Friday. Despite beating out expectations by a large margin the number is in line with its recent trend.
Â· IT Sep Total Trade Balance: -â‚¬1.53B v -â‚¬1.4Be || Prior revised from -â‚¬650M to - â‚¬687M
Â· IT Sep Trade Balance EU: â‚¬580M v â‚¬140Me || Prior revised from â‚¬331M to â‚¬294M
Â· EU Sep Trade Balance: â‚¬3.1B v â‚¬3.0Be || Prior revised from â‚¬1.3B to â‚¬1.9B
Â· EU Sep Trade Balance sa: â‚¬3.9B v â‚¬4.3B prior || Prior revised from â‚¬4.3B to â‚¬4.5B
Â· *** SPEAKERS/COMMENTS ***
Â· BNP Paribas: Cuts Year-End US Dollar Forecasts; Cites Fed Rate Outlook
Â· BNP Paribas: Forecasts â‚¬ at $1.48; Previously forecasted â‚¬ at $1.46
Â· BNP Paribas: Forecasts $ at Â¥111; Previously forecasted $ at Â¥114
Â· BNP Paribas: Forecasts $ at CHF1.11; Previously forecasted $ at CHF1.16
Â· Goldman Sach's Hatzius: Subprime losses may be $400B and may cost the economy $2T
Â· Goldman Sach's Hatzius: Risks are significantly greater than recognized
Â· Goldman Sach's Hatzius: Bank losses are amplified because of leverage
Â· Angolan Fin Min: Mulling Diversifying $10B Currency Reserves; Seriously concerned about the weakening dollar
Â· Angolan Fin Min: Notes that 70% of currency reserves are in US Dollars
Â· Angolan Fin Min: Looking Hard At Moving More Into Euros
Â· Angolan Fin Min: Supports any OPEC currency basket plan
Â· Air France: The weakening dollar is not negative fro the company
Â· Joseph Stiglitz: The chance of a US recession are 50/50
Â· Joseph Stiglitz: The workout of imbalances will cause global problems
Â· Joseph Stiglitz: Very pessimistic over US housing and sub- prime
Â· Joseph Stiglitz: Sees the need for a global agreement to curtail the use of oil
Â· *** FIXED INCOME/FX/COMMODITIES/ERRATUM ***
Â· Front month crude oil futures are currently trading in the low- mid $90/barrel range ahead of this weekend's OPEC summit in Riyadh. Following two weeks of comments from various OPEC representatives market participants have concluded that the changes of an output hike are slim to none, with none in the lead. According to wire headlines citing sources, if there is a general consensus, OPEC may discuss weak Dollar concerns in the summit communiquÃ©.
Â· Fixed income futures are trading higher in the session, bolstered by continued safe haven flows as sub-prime jitters continue to spoke the market. Goldman Sachs economist Hatzius said overnight that sub-prime losses may be as much as $400B, and could cost the economy up to $2T. Hatzius added that risks are significantly underestimated, noting that bank losses are amplified because of leverage. Hatzius' comments, along with vague rumors of large withdrawals from a Carlyle Group-ran fund amplified a technical breakdown in the European indices, adding upside momentum to fixed income futures.
Â· Concerns about Dollar weakness and the implications are spreading. BNP Paribas reduced its year-end dollar forecasts overnight. Wire sources said that Dollar worries may appear on the OPEC summit communiquÃ©. Additionally, the Angolan finance minister said overnight that country is significantly mulling moving some of its $10B in currency reserves out of Dollars, with a hard move into Euros. Angola currently holds about 70% of its reserves in Dollars.
Â· The Euro had heavy tone overnight after the German press ran a story speculating that German bank IKB may face additional sub-prime losses of around â‚¬300M. The cable remains soft following a large amount of economic data this week, most notably the change in the BOE's tone in its quarterly inflation report. The Yen is firmer supported by the reemergence of credit concerns in the US and Europe. The Dollar showed little reaction to the negative Dollar related comments overnight, perhaps suggesting that a bottom is in sight.
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