GBP/USD Support Held

* The dollar fell versus most major currencies on Tuesday. The dollar index was at a 14-month low and below the 76-handle despite the S&P 500 index declining 3.00 points to 1,073.19. Intel reported strong results after the stock market was closed. The yen rose modestly ahead of the Bank of Japan’s interest rate decision. The BOJ is expected to maintain its key rate at 0.10%. Investors are anxious to see whether the BOJ is considering changing its bond purchasing plan. The euro rose despite a modest decline in European investor sentiment. The Australian and Canadian dollars advanced, adding to recent strong gains as commodity prices climbed.

* The GBP/USD rose on generally better-than-expected UK economic data. Retail sales and housing figures supported the pair, while declining inflation rates limited gains as investors speculated that the Bank of England’s quantitative easing may continue longer than expected to avoid consumer prices falling below the BOE’s inflation target. The GBP/USD is at critical support in the 1.57-1.58 area. If this is broken, the pair may fall dramatically.

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Financial and Economic News and Comments

US & Canada

* Canada’s new housing prices gained for a second month in August, increasing 0.1% m/m following July’s 0.3% m/m advance, Statistics Canada reported. The August month-on-month gain was led by St. John (+1.1% m/m), Québec (+0.9% m/m) and Regina (+0.8% m/m). August new housing prices declined 3.1% y/y, with the largest year-on-year drops in Western Canada.

Europe

* The ZEW eurozone economic expectations index decreased to 56.9 in October from 59.6 in September, indicating eurozone investor confidence unexpectedly fell this month, according to data from the ZEW Centre for European Economic Research. The current economic situation index improved to -75.4 from -77.9.

* The ZEW German economic expectations index declined to 56.0 in October from 57.7 in September, ZEW data showed, indicating Germany’s investor confidence unexpectedly fell for the first time in three months but remained well above a historical average of 26.7. The current economic situation gauge increased to -72.2 from -74.0.

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* The UK consumer-price inflation rate decelerated to a lower-than-expected 1.1% y/y in September, the lowest in five years, from 1.6% y/y in August, according to CPI data from the Office for National Statistics. September consumer prices were unchanged m/m. The core inflation rate eased to 1.7% y/y from 1.8% y/y. Retail prices increased 0.4% m/m in September but declined 1.4% y/y. Excluding mortgage interest payments, September retail prices rose 1.3% y/y.

* With “consumer confidence trickling back,” UK retail sales increased 2.8% y/y on a like-for-like basis in September after a 0.1% y/y decline in August, the British Retail Consortium reported. On a total basis, September retail sales gained 4.9% y/y after a 2.2% y/y advance a month earlier.

* UK house prices slid 5.6% y/y in August, easing the pace of decline from an 8.3% y/y decrease in July, the Department of Communities and Local Government said.

* The seasonally adjusted net balance of surveyors reporting increasing rather than decreasing UK house prices advanced in September to a reading of 22%, the highest net balance since May 2007, after a downwardly revised 10% in August, a monthly survey from the Royal Institution of Chartered Surveyors showed, suggesting the UK housing market is strengthening.

* Switzerland’s producer and import prices rose for a second month in September, advancing 0.2% m/m after August’s 0.1% m/m increase, the Swiss Federal Statistical Office reported. The September advance was led by a 0.3% m/m rise in import prices as well as higher prices for non-ferrous metals and products. September producer and import prices were down 4.9% y/y, following a 5.5% y/y decrease a month earlier, attributable to the sharp year-on-year decline in prices for petroleum and metal products.

Asia-Pacific

* The NAB Australian sentiment index declined to 14 in September from 18 in August, indicating Australia’s business confidence fell for the first time in five months, National Australia Bank Ltd. reported. The business conditions index slid to 3 in September from 4 in August, indicating conditions on hiring, sales and profits posted their first decline in four months. However, employment conditions improved in September, with the employment index increasing to -1 from -11.

Источник: Hans Nilsson

13.10.2009