Durables Disappoint, More Japanese Stimulus Talk

Durable goods orders added a downside risk to Friday’s GDP report. The pound was the best performer while the yen lagged. Reports continue to circulate about Japanese government stimulus and central bank easing. See below for last night's Premium Insights.

US trading had a decided tone of risk aversion after the report on durable goods orders showed a continued reluctance by businesses to invest. Non-defense orders excluding aircraft were flat in September compared to a 0.8% rise expected. The prior reading was also revised lower.

Several economists revised Q3 GDP estimates lower after the release and the true market consensus is now probably 1.6-1.7% rather than the 1.8% cited by news agencies. The numbers also point to a weak fourth quarter, virtually assuring that full-year growth will be below 2%.

In other economic data, initial jobless claims were 369K compared to 370K expected and pending home sales rose 0.3% compared to 2.5% expected.

The euro rose in early European trading, hitting 1.3020 but slumped throughout US trading, falling as low as 1.2927 late in the day.

The yen was weak across the board despite jitters in the stock market. GBP/JPY rose to the highest since May and several other yen crosses broke key levels. Reports continued to circulate about a 700B yen government stimulus plan and 10T (or more) in additional BOJ quantitative easing. The governor of Tokyo also announced a new political party which will run in elections expected early next year.

The top item on the calendar is Japanese CPI at 2330 GMT. National CPI for September is expected to fall 0.5% y/y. October Tokyo CPI is forecast to fall 0.2% y/y.

GBPUSD long from last night's Premium Insights was unfilled by 4 pips. 1 of 2 EURUSD filled from last night's Premium Insights. The same for USDJPY, 1 of 2 CADJPY and AUDUSD. We added 4 charts on EURUSD and gold to last nights Premium Insights to dissect the technical complexities for gold (daily and weekly sochastics and MA confluence) as well as euros intermediate trendline and its shifting behavior relative disappointing IFO & PMIs. For direct access to these Premium trades, please click here: http://www.ashraflaidi.com/products/sub01/access/?a=691 Non subscribers, can click on here to join: http://www.ashraflaidi.com/products/sub01/

-AB