Forex & Economic Commentary by Lloyds TSB

Equity markets have started to faded the intervention by the US government
and this prompted profit taking in Asia as gauges of market fear
rebounded. This didn’t stop the dollar from carving out new gains on the
back of lower oil prices. €/$ slipped below 1.41 and £/$ hit a low of
1.7505 on the bearish BRC survey. Volatility remains high in fx markets,
especially in Asian EM where a return of some degree of risk appetite is
bolstering fx demand. However, Eastern European fx crosses remain
under pressure, with the zloty and rouble struggling. The response
yesterday to the surge in equity markets in gold was very muted and
points to underlying discomfort among some participants. Moreover, the
TED spread widened again o/n from 100bps to 111bps. UK BRC retail
sales suggest weaker volumes in September but the report was mitigated
by a slightly stronger RICS house px survey. UK production data is
due at 9.30 but is not of the calibre to move sterling crosses.

Go to Full Article