Foreign Exchange Cartel

The overnight sell off in the USD following the deal to re-open the US Government looks a tad overdone even if we take into account the impact of the shutdown on US growth and Janet Yellen’s appointment at the Fed. Although the likelihood of tapering is very slim this year given we are left with only 2 months before the year end, the prospect of one in Q1 2014 will limit the USD sell off.

Chinese Q3 GDP which came in as f/c at 7.8% with retail sales at 13.3% which is below forecasts at 13.5% not likely to be of much help to the commodity currencies with AUSD/USD hitting session lows after the data. Upbeat UK employment and retail sales data help to buoy the Cable but stagnating wages is a concern even as inflation has started to inch higher. Thus the Cable’s rally against the USD looks overstretched with 1.6260/1.6310 likely to be the top this rally. Empty slate out of Europe with only North American data in the form of Canadian CPI f/c at 0.1% m/m(0.0) & US leading indicators. A slew of Fed speakers including Tarullo, Evans, Dudley, Stein & Lacker & ECB Nowotny.

Further developments in the story that Timizzer wrote last Friday is that UK authorities have begun a full fledged investigation into the alleged fixing cartel by traders from RBS,CITIGROUP and UBS.Traders from both JP Morgan and Citigroup have had their Bloomberg chat rooms scrutinized for proof of price rigging.Readers will recall that the WMR fixing rate is used as a benchmark by lots of asset managers and managed equity funds .

About Hetal Patel - Chief Editor, Europe

Hetal Patel has written 58 post in this blog.