Euro: Rate Hike, Rate Hike, Rate Hike (page 2 of 2)

The Canadian economy has proved to be far more resilient than any of us could expect so it would not be surprising if the manufacturing and housing market reports confirmed this. As for the New Zealand dollar, stronger labor costs in the third quarter gave the currency a good reason to outperform the US and Australian dollars. Unfortunately the Aussie did not participate in this rally; many traders find it hard to believe that the RBA will be raising interest rates later this week. Overall the Australian economy remains strong. Even though service sector PMI was softer last month, job advertisements increased 2.7 percent and the TD securities inflation index ticked higher.

British Pound Finally Succumbs to Weaker Economic Data

After rising for seven days in a row, the British pound finally succumbed to weaker economic data. Service sector PMI and industrial production all fell short of expectations illustrating the difficult time that UK manufacturers are having with the high value of the British pound. Like the ECB, the Bank of England will also be meeting to decide on interest rates. If they leave monetary policy unchanged, no statement will be released. We suspect that tomorrow's UK GDP number could be softer as well, but the biggest driver of pound strength or weakness is not UK fundamentals but US fundamentals. According to our Technical Analyst Jamie Saettele, the GBPUSD is poised to take out 2.10.

Carry Trades Up One Day, Down the Next

The Japanese Yen crosses have been range bound for the past few trading days and the latest wave of weakness came from the sharp selling of Asian equities overnight. China put their plans of allowing their citizens to invest in the HK stock market on ice, causing the Hang Seng to drop 5 percent. To put this into perspective this would represent at 675 point down move in the Dow. There was no Japanese economic data released last night and leading indicators are the only data due for release this evening. As usual, Japanese Yen traders should continue to watch the equity markets for more direction.