Forex Investment and Currency Trading

Today equities are in focus once again, after tanking overnight in Asia and Europe. There’s a lot of chatter about another coordinated inter-meeting rate cut from major central banks, but this time a bigger one of something like 100bps. Definitely something to keep an eye on this morning, with G7 central bankers already gathered together for the weekend meeting.

Overnight the Aussie and New Zealand dollars got hit pretty hard, erasing yesterday’s gains. GBP fell to its lowest level against the USD in about 5 years, and CHF rose to a 4-year high against the Euro. USDJPY remains below 100, which is going to be of some concern to the Japanese government, since it makes Japanese exporters less competitive. With the Japanese trade balance having recently fallen into a deficit position for the first time since the early 1980s, the last thing that Japanese exporters need right now is for the Yen to record its biggest weekly gain in 10 years, which it’s currently poised to do.

Data
In France, industrial production for August fell by 0.4%, which was not quite as bad as expected. The Y/Y rate is now sitting at -2.6%, which is its worst reading since January 2002.

In Norway, September CPI was quite a bit stronger than expected at 5.3% Y/Y, as was the underlying rate at 3.1% Y/Y. The headline number was the highest rate of inflation that Norway has seen in 20 years, thanks partly to rising electricity costs.

Sweden’s AMB unemployment rate for September rose to 3.1%, which was its fourth monthly rise in a row. However, the number is not seasonally adjusted, which makes it a little bit difficult to read.

Switzerland’s unemployment rate rose to 2.6% in September, which was the first time that it rose in 5 years.

In Canada we got the employment report for September earlier this morning, and it was a real shocker, with 107K jobs created. This was the strongest monthly job report since 1976, and the second-strongest number on record, going back to 1966. At a time when the economy’s clearly slowing, this kind of job creation was completely unexpected. The only weak point in this report is that almost all of the job creation from part-time work. And with about half of the 114K increase in the labour force having come from workers aged 55+, we wonder if perhaps with the stock market falling, some retirees decided to return to work part-time to top up their savings. Nonetheless, the fact that businesses were willing to hire all those retirees, even on a part-time basis, does suggest that Canadian business conditions are still looking pretty healthy.

Later this morning we also get the international trade report for August, where the trade balance is likely to show a substantial deterioration from the $4.9B surplus in July. The combination of falling commodity prices and tanking US industrial production suggests that the trade balance could come in a lot lower than the $4.4B predicted by the markets.