MORNING FX
BRIEFING
Return of the Tokyo market (following Monday's holiday) prompted strong selling of yen crosses, at the open and through the Tokyo fix, which in turn added to the corrective pullbacks in euro-dollar, cable and the Aussie. Gold initially eased $7 to $1158, bouncing back to $1166, currently around $1164 and remaining buoyed. Repatriation, profit taking seen as the main driver, with concern toward Greece still bubbling away in the background, as well as reports in the FAZ that WestLB requires further cash injections, seen providing a counter to recent risk on tone, and also adding negative weight on the euro.

FOMC Minutes after the European close to be the day's highlight, though most expect no major surprises from the recent line. Germany GDP and Ifo data, BOE MPC at the TSC, EZ Industrial Orders the morning's highlights, with US GDP the early afternoon focus. Sterling outpaced the euro-dollar pullback in Asia with traders suggesting that the MPC could affirm the need for a weak pound for economic rebalancing which could again weigh back on the pound.

EURO
Euro-dollar opened Asia around $1.4960 with initial demand lifting the rate up to session highs of $1.4972 ahead of the Tokyo open. The return of Tokyo markets, following Monday's holiday, saw the centre active sellers of yen crosses into the open and through the Tokyo fix. The weight of selling took the rate through the NY base at $1.4957, with triggered stops on the break of $1.4950 providing the weight to take it on to an initial low of $1.4937. Recovery attempts were capped by sell interest between $1.4955/60 before rate pushed down to mark extended session lows at $1.4928.

Further sell interest into early Europe takes rate down to $1.4911 at writing. Support seen placed toward $1.4900, a break here to allow for a deeper move toward $1,4875/70 ahead of $1.4850/40. Resistance now seen toward $1.4930/35, a break here to open a move back toward $1.4965/75 ahead of $1.5000.

YEN
After edging up to highs at Y89.20 in the NY session, dollar-yen eased back to close around Y89.00, as euro-yen slipped back to Y133.10, failing to break through the Cloud top at Y133.88. Return of the Tokyo market Tuesday following yesterday's holiday found yen crosses under pressure from the open, further selling coming through at the fix, taking euro-yen back under Y132.80 and dollar-yen to Y88.80. Both pairs consolidated into the afternoon session, before another round of selling as the Nikkei ended at a fresh four-month low. Euro-yen dropped to Y132.45 as dollar-yen moved to Y88.73, with early European dealing seeing lows extended further.

Models and real-money accounts said to be the yen buyers, while semi-official demand is rumoured to come in around Y88.60/50 this morning, importers and investors also looking to buy the dip. Stops noted under Y88.50 and Y88.10, ahead of barrier interest at Y88.00. 200-day moving average back under pressure at Y132.29, a close below still eyed for the first time since May 2009. Trendline support from the October lows also seen cushioning at Y131.93.


CABLE
Opened in Asia around $1.6610 and initially edged up to mark session highs at $1.6620, as early market moved into risk after the positive close on Wall Street. A returning Tokyo market were strong sellers of yen crosses, the weight of which weighed back on cable to take the rate down to an initial low of $1.6560. Rate recovered to $1.6587 before turning lower again, extending the overnight base to $1.6550. Recovery to $1.6575 proved short lived as early Europe added weight. Rate broke below $1.6550, extending lows to $1.6519, with rate currently trading around $1.6524. Support seen placed toward $1.6500 ($1.6505 76.4% $1.6460/1.6649), a break here to open a deeper move toward $1.6460/50. BOE King at the TSC today with some expectation that he will again refer to a weak pound supporting UK growth. Resistance seen at $1.6550, more at $1.6570/80.

OPTIONS AND MORE
FX Option expiries for today's 1500GMT cut

* Euro-dollar; $1.4900, $1.4980, $1.5000, $1.5050
* Dollar-yen; Y88.00, Y88.50(lge), Y89.50, Y90.00
* Cable; $1.6790
* Euro-Swiss; Chf1.5150
* Aussie; $0.9300
* Dollar-Canada; C$1.0750

EUROPEAN STOCKS: European equity bourses are seen opening lower Tuesday, with spreadbetters calling the FTSE-100 down 33pts, CAC-40 down 32pts and Xetra-DAX down 45pts. The banking sector is in focus this morning after news Lloyds Banking Group (LLOY) will be undergoing a Stg13.5bln rights issue as part of its Stg22.5bln capital raising efforts, with new shares offered at 36p. The firm also managed to raise Stg8.5bln in new debt yesterday, most of which can be converted to equity if the banks finances come under pressure. On the macro front, German IFO at 0900GMT, EMU Industrial Orders at 1000GMT, US GDP data at 1330GMT and the Case-Shiller data at 1400GMT, will all be watched for direction today.

DAILY CALENDAR
The European day starts a full calendar session at 0700GMT, with the release of German detailed Q3 data, followed by French housing starts/permits and French November manufacturing sentiment at 0745GMT.

French data continues at 0750GMT, with the release of French October consumer spending. At 0800GMT, Spain Oct PPI data is released.

At 0900GMT, Germany Nov IFO business sentiment is released, the main focus for European players in the morning session

In the UK, at 0930GMT, Q3 preliminary business investment data is released, along with the October BBA Loans For House Purchase data.

At 0945GMT, Bank of England Gov. Mervyn King is at the House of Commons Treasury Committee, giving evidence on the November inflation reports. BOE MPC Members Paul Tucker, Paul Fisher, Adam Posen and Andrew Sentance also to attend.

Additionally, BOE Gov. King and MPC Member Andrew Sentance issue their Annual Report.

At the same time, German Chancellor Angela Merkel gives a speech at the BDA conference, in Berlin. AT 1000GMT, EMU Sep industrial new orders data is released, followed at 1230GMT by German Economics Minister Rainer Bruederle speaking in Berlin

A full US calendar gets underway at 1245GMT, when the 21-Nov week ICSC-Goldman Store Sales data is released.

At 1330GMT, US third quarter revised GDP, Chain Price Index data are released. Third quarter GDP is expected to be revised down to a 2.8% pace in the second estimate. The key factors are expected to be a wider trade gap and more inventory drawdown, as well as slower PCE growth than previously expected. The chain-price index is expected to be unrevised at +0.8%.

Back in Europe, at 1400GMT, the BNB Nov business sentiment is released.

Further evidence of the state of the US housing market is released at 1400GMT, when the Sept 09 S&P/Case-Shiller Home Price Index and at 1500GMT, when the Sept FHFA Home Price Index is out.

Further data is released at 1500GMT, with the November Consumer Confidence data and the Richmond Fed Manufacturing Index. Consumer confidence is expected to fall to a reading of 47.0 in November after backing up to a 47.7 reading in October.

Also at 1500GMT, FDIC Chair Sheila Bair holds a press briefing on the Q3 bank and thrift earnings in Washington.

Back in the UK, at 1535GMT, BOE Gov. King gives further testimony to Parliament, this time to the House Of Lords Economic Affairs

At 1730GMT, SNB President Jean-Pierre Roth holds speech at the International Center for Monetary and Banking Studies, in Geneva

Big release for the bond markets at 1900GMT in the US, when the latest FOMC Meeting Minutes are released. Last releases data is at 2200GMT, when the 22 Nov week ABC News Survey of confidence is released.

NordMarkets Morning FX - October 29

MORNING FX
BRIEFING
The negative close on Wall Street passed over to Asian equity markets with the recent paring back of risk trades continuing through the overnight session. Yen and dollar were the main beneficiaries, strong sales of yen crosses, Aussie-yen and sterling-yen highlighted, helped to punch dollar-yen to session lows of Y90.23, with euro-yen making an appearance below Y133.00, trading to a low of Y132.81. Euro-dollar remained under pressure, having been sold off after Wednesday's London fix, extending the NY low of $1.4693 to $1.4683 in early trade before rate was able to recover back above the figure. This correction allowed euro-yen to edge back above Y133 later in the session, though the euro seen under renewed pressure in early Europe. RBNZ left interest rates unchanged, as widely expected, the accompanying statement disappointing as it provided no indication for any near term rate hikes. Kiwi came under pressure, Aussie-kiwi was able to lift despite the reported sales of Aussie-yen. US GDP data today's highlight, with German unemployment, UK money data and EMU confidence also noted.

EURO
Euro-dollar opened the Asian session around $1.4720, off late NY lows of $1.4690, with the recovery extending to around $1.4730 in early trade before meeting strong headwinds from cross yen sales. Rate dropped back, moving through the NY low to $1.4683, the move meeting decent demand interest in the area between $1.4685/80 before recovering. Talk late Wednesday suggested that the $1.4680 level holds the strike of a large expiring option for today's 1400GMT cut and expected to provide some attractive influence. Upside correction continued through the balance of the Asian session, the rate edging up to highs of $1.4736. Rate dropped back toward $1.4700 ($1.4703 61.8% $1.4683/1.4736) as early Europe sold into the recovery, but dip attracted further demand, lifting it back to current level around $1.4720. Weak talk in Asia suggested Asian sovereign demand seen off the earlier lows and expected a similar scenario to Wednesday with ACB's buying into dips. Bids remain in place toward $1.4700, stronger between $1.4685/80. Offers $1.4736 through to $1.4750. Further offers $1.4770/80. US GDP the main focus.

Elsewhere, euro-sterling is under pressure again into early European trade Thursday, with traders noting further long positions getting squeezed out, with continued talk that M&A related sales have provided the main downside lead. Rate saw a low in NY of stg0.8951, consolidated the break under stg0.9000 in Asia between stg0.8976/95, with the reported early sales taking the rate to early session lows at stg0.8955. Bids remain in place to stg0.8950, a break below to open a deeper move toward stg0.8910, with demand noted from here and extending to stg0.8898. Some suggest stg0.8840 as a near term target. Resistance remains toward stg0.9000.

The euro sees the bear-cross in the daily Stochastic, 10-day momentum and now in the 5 & 21-DMAs, keeping bear's on further Fibonacci retracements at $1.4628 and $1.4561. Bulls now need a break above $1.4825/35 to get back in control.

RES 4: $1.5163 76.4% of $1.6039 to $1.2329
RES 3: $1.5080/10 Top of the daily Bollinger band
RES 2: $1.5060/64 Potential double-day high 23, 26 Oct, 1% MAE
RES 1: $1.4825/35 5, 21-day moving average

CURRENT LEVEL: $1.4728

SUP 1: $1.4628 50% retracement of Sep-Oct rally
SUP 2: $1.4561/90 38.2% of the Jun-Oct advance 2% MAE, Bollinger band
SUP 3: $1.4480/88 Low 2 Oct, 23.6% of Mar-Oct advance
SUP 4: $1.4407/47 50% retracement of June-October advance, High 5 Aug

YEN
Yen crosses were under heavy pressure in the NY session as euro-yen gave back close to 200-points, closing just off the Y133.28 low, while dollar-yen slipped back to Y90.55, ending around Y90.75 amidst a backdrop of negative equity markets. Early Asian dealing then saw Japanese margin stops being triggered in the crosses as Aussie-yen and sterling-yen were sold heavily. Euro-yen followed suit, slipping from early highs at Y133.73 to fresh lows for the recent run at Y132.81. Dollar-yen had notched early highs at Y90.81 before a move down to Y90.40, while Japanese data again came in better than forecast as Industrial Production rose 1.4% m/m versus expectations of +1%. Tokyo names gunned for stops through Y90.30 as dollar-yen slipped to Y90.23, consolidating under Y90.40 into the Asian afternoon. Euro-yen was able to bounce back to Y133.30, subsequently remaining contained in a relatively tight range ahead of the European open. Early Europe now seeing bounces extended as dollar-yen makes a show above Y90.50 and euro-yen moves to Y133.40.

Dollar-yen sees bids in the Y90.20/15 area this morning, with stops coming in below Y90.00. Techs see the 50% retrace of this month's rally under pressure at Y90.17, ahead of the 61.8% retrace at Y89.66. Traders are also noting Toushin issuance today for a maximum value of Y400bn, said to be split primarily between S. Africa, Brazil and Australia, though Tokyo names were not expecting a good take-up. Better results are expected Friday with Y1trn of issuance due (Y100bn each for S.Africa, Brazil, China and Australia).

The daily stochastic is now making a bear-cross in dollar-yen as the market pulls back below the 8 Oct support line and tests the Kijun line and 21-DMA at Y90.10/25. Initial resistance is at Y91.25/40 from the Tankan line and 5-day moving average. Euro-yen has pulled back further and now moved below a series of resistance from Y133.50 to Y134.00, which includes the parameters of the Ichimoku cloud and also the 21 & 100-DMAs. This all comes after the daily stochastic sees a bear-cross. Next Fibonacci level is nearby, at Y132.68.

RES 4: Y92.81/90 Projected channel top, 50% of Aug/Oct decline
RES 3: Y92.53 Failure high 21 Sep
RES 2: Y92.00 Base of the Ichimoku cloud
RES 1: Y91.25 Tenkan line of the Ichimoku cloud

CURRENT LEVEL: Y90.37

SUP 1: Y90.25 21-day moving average
SUP 2: Y90.09/17 Low 20 Oct,Kijun line, 50% of October rally
SUP 3: Y89.66 61.8% retracement of October rally
SUP 4: Y88.80 Lows 14 Oct

CABLE
Opened Asia around $1.6390 and initially edged to mark session highs at $1.6409 before meeting strong headwind sales as Japanese accounts sold yen crosses, sterling-yen and aussie-yen coming under the main pressure. Cable was pressured to lows of $1.6335 (almost mirroring Wednesday's early Asian move). Cable recovered off lows, as continued sales of euro-sterling provided a counter to sterling-yen supply, the rate edging back to $1.6400 ahead of the European open, dipping back to $1.6360 before stronger selling in euro-sterling provided the added upside momentum to spike cable to $1.6446. Rate currently trades around $1.6440. Offers seen placed between $1.6465/70 with recent reports noting stops in place on a break above. Tech resistance noted around $1.6480 may restrict further upside move, one trader suggests. However, through here and rate can edge toward $1.6500 ahead of $1.6530/35. Support seen at $1.6420 (23.6% $1.6335/1.6446), a break here to allow for a deeper move toward $1.6405/00.

In Cable, the bearish engulfing pattern and the bear-cross in the stochastic now risks being joined by a bear-cross in the 10-day momentum, keeping bear's attention on Fibonacci retracements of the $1.5708 to $1.6694 rally from $1.6201 and the $1.6115/70 support area, which starts with the 21-DMA. While $1.6251 remains the low, upside retracements are $1.6474, $1.6526.

RES 4: $1.6726/40 76.4% retracement of $1.7041-$1.5708, High 11 Sep
RES 3: $1.6695 Current top of the daily Bollinger band, High 23 Oct
RES 2: $1.6526 61.8% retracement
RES 1: $1.6474 50% retracement of 23 Oct decline

CURRENT LEVEL: $1.6390

SUP 1: $1.6240 Low 19 Oct
SUP 2: $1.6201 50% retracement of the October recovery
SUP 3: $1.6170 21-day moving average
SUP 4: $1.6115/34 High 8 Oct, Low 1 Sep, Spike 30 Sep, Low 21 Sep


DAILY CALENDAR
European data for Thursday started at 0700GMT when German seasonally adjusted employment fell by 33,000 persons between August and September to 40.101 million, according to the Federal Statistical Office. In non-seasonally adjusted terms, employment rose by 269,000 to 40.355 million as measured by the International Labour Organization.

From 0730GMT, there is an ECB conference on key developments in monetary economics. Speeches will be delivered by ECB President Jean-Claude Trichet and Vice-President Lucas Papdemos. The event takes place in Frankfurt and continues through to Friday.

At 0800GMT, German Chancellor Angela Merkel is due to deliver a speech in parliament on the agenda of her new government.

The main German unemployment data for October is due at 0855GMT and is expected to see the unemployment rate edge up to 8.3%. This is followed shortly by German VDMA machine-tool orders data at 0900GMT.

UK data at 0830GMT Thursday sees Final M4 Lending, Lending Secured On Dwellings, Consumer Credit and also Final M4 Money Supply. Final EMU data at 1000GMT sees the EMU October economic sentiment index and the business climate indicator, where the economic sentiment index is expected to rise to 84.5 from 82.8 last month.

At 1000GMT, ECB Governing Council member Mario Draghi speaks at the "2009 World savings day", in Rome , while at 1110GMT, ECB Governing Council member Axel Weber is due to participate in a discussion on the financial crisis, at an event in Berlin.

US data starts at 1230GMT with the weekly Jobless Claims, while Q2 GDP and the Chain Price Index are due at the same time.

Jobless claims are expected to fall 6,000 to 525,000 in the October 24 week, while third quarter advance GDP is expected to rise 3.0% after the 0.7% decline in the previous quarter.

The key factors are expected to be a strong gain in PCE due to car sales, smaller fixed investment and inventory declines, and increased government spending. Net exports appear to be a very modest drag in this quarter's release and after adding to growth in previous quarters. The chain price index is forecast to rise 1.4% after the flat reading in the second quarter.

At 1330GMT, Treasury Secretary Tim Geithner testifies to the House Financial Services Committee on "Systemic Regulation, Prudential Matters, Resolution Authority and Securitization."

US data then continues at 1400GMT with Housing Vacancies data, which is followed at 1430GMT by the weekly Natural Gas Stocks data and at 1500GMT by Kansas City Fed Production.

Later on, at 1615GMT, White House National Economic Council head Lawrence Summers speaks to the Economic Club of New York.

Late in Europe, at 1730GMT, Bundesbank board member Thilo Sarrazin takes part in a panel discussion, in Berlin.

Late US data sees the 2030GMT release of M2 Money Supply. Overnight, at 0040GMT Friday, Treasury Secretary Tim Geithner speaks to the Economic Club of Chicago.



Best Regards,

NordMarkets.com