IMF Bullets Bounce Off, China PMI Next

The IMF unveiled a program to let countries borrow for up to 2 years but it barely dented the negative market sentiment. CHF and CAD were the top performers while AUD and USD lagged but the overall moves were less than 50 pips. Japan is on holiday and the lone economic indicators are Australian Q3 construction, followed by HSBCs China Nov PMI.

The IMF unveiled a lending facility to help countries protect themselves from contagion in a financial crisis. The plan would allow countries to borrow 5 times their IMF quota for a period from 6-24 months. The euro initially jumped on expectations it would free up approx 45B for Italy and 23B for Spain.

It appears the next item on the agenda for Eurozone leaders will be altering treaties. The decisions to institutionalize budget discipline could come as soon as Dec 9 but the ratifications will surely set off a series of political firestorms.

Economic data weighed on sentiment as US Q3 GDP was revised to 2.0% from 2.5%. No change was expected. Downward revisions were slight and broadbased but the biggest single source came from inventory investment. Trade was a net positive. The market interpreted the report negatively but much of the lost growth will be simply shifted to Q4. The Canadian dollar outperformed with retail sales rising 1.0% in Sept versus the 0.5% expected. The strength in the report was broad based.

The S&P 500 fell 0.4% to 1188

Asia-Pacific Preview

At 0030 GMT, Australia releases data on construction work done in Q3. Spending is expected up 2.0% compared to a 0.7% rise in the previous quarter. This release is highly unlikely to get things moving and the Japanese labour Thanksgiving day will add to the malaise.

China's Nov PMI as prepared by HSBC is due out at 2:30 am GMT. The Oct figure was at 51.1. The days are ticking for the next rate cut.

The PBOC said yesterday it cut the reserve requirements on 5 rural banks by 50 bps to 15% as part of long-standing efforts to support the rural economy,.