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When US markets closed on Friday, hardly anyone expected PM Papandreou would win the confidence vote. Now that he won it, it is uncertain as to the structure of the new coalition govt. The good news is that no referendum will be held and the 8 bln tranche remains en route to Athens. On Friday, USD and JPY were the top performers while CAD and CHF were the laggards. Fridays CFTC report (see more below) showed JPY longs scrambling for the exits but, otherwise, the US dollar was unwanted. See our late Friday trades ahead of Sundays open.

The headline number on non-farm payrolls missed expectations, climbing 80K versus the 95K expected but the prior two months were revised higher by a combined 102K and unemployment fell to 9.0% from 9.1%.

Risk was off in the broader market after NFP and due to growing concerns about discord in Italian politics. The S&P 500 fell 0.6% to 1253.

We warned yesterday that EUR/CHF was nearing levels of concern for the SNB but officials clearly didnt need prompting as the pair jumped 100 pips in an apparent intervention, underscoring the danger in shorting this pair.

Weekly Charts

EUR/USD closed at the lowest in two weeks but the bias isnt overly negative as the four week reversal/rally remains the dominant feature on the charts.

GBP/USD formed an outside week, exceeded both the highs and lows from the prior week, but closed precisely in the middle of the weekly range. Theres no strong signal here but the bias is sideways or higher.

With the intervention in USD/JPY, there is obviously a huge bullish candlestick on the chart but the pair was unable to break downtrending resistance from the May high.

USD/CAD jumped on Friday after the soft Canadian jobs data but the gains werent quite enough to convince us that a return to 1.06 is a sure thing before we see a return to parity. A break above 1.0263 would generate a buy signal.

Looking at the week as a whole, it comes off as a minor consolidation after four weeks of risk appetite. This generally points to a return to risk appetite but that scenario is difficult to reconcile with the host of dangers on the fundamental side. But if the past several weeks of trading has taught us anything, its that technicals are a better indicator in an environment where fundamentals and sentiment are so volatile.

Commitment of Traders

Speculative traders appeared to be caught offside in the JPY intervention. We warned last Friday that Japan may be looking to punish speculators after yen longs nearly doubled in the CFTC report. On Monday that is precisely what happened and traders proceeded to dump more than half their longs.

The sharp rebound in EUR/USD late last week sparked some short covering as the net EUR position improved 16K but still remains deeply negative at -60K. Similarly, sterling climbed to -47K from -50K and CAD to -15k from -18K.

Specs continue to hold the antipodeans long as AUD rose 3K to 26K and NZD by 1K to 11K. The data covers through the close on Tuesday.

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Adam Buttom

See our Latest Euro & Silver trades at end of parag. Greek Parliament starts debate on confidence vote, followed by speeches from Finance Min Venizelos, PM Papandreou and opposition leader Samaras (of New Democracy Party). The confidence vote is so far scheduled for midnight local time (18:00 ET, 22:00 GMT) but could change depending on the debate/speeches according to MNI. Direct Access to Today's Premium Trades http://ashraflaidi.com/products/sub01/access/?a=543 Non subscribers: http://ashraflaidi.com/products/sub01

Greek confidence vote could change sentiment that improved after referendum plan was scraped; Italy agreed to reforms monitoring, EU final services PMI worse than estimates; Canadian labor market weakened. Market turns to NFP, unemployment rate and Canadian Ivey PMI.

The USD trades weaker against most majors. The exception is CHF that is weakening across the board as EURCHF rallies and CAD that dropped on weak labor market data. Major European equities are up nearly 1%.

G20 meeting continues today and investors can only hope that today will be less confusing than yesterday. A list of reports and headlines that were later denied or proven to be inaccurate is likely to keep major players on the edge of their seat willing to change their bias in a second. Market sentiment improved after Greek referendum plan was scraped but that could all change as the confidence vote takes place later today.

Italy has agreed to allow the IMF and the EU to monitor its progress on privatization and pension reform. Even though this step by itself is not significant, it could help to bring down the surging 10 year yield as the reforms become more credible. Italian 10 year continues to yield around 6.2%

One does not need many words to describe today's revisions to October services PMI: they all disappointed. To be more precise, German services PMI stayed above the 50 level but was revised considerably lower to 50.5 from flash 52.1. Italian and French service sector is deeply in the contraction territory at 43.9 and 44.6. Eurozone's final services PMI was revised lower to 46.4 from flash estimate of 47.2 and the composite PMI fell to 46.5 which is the lowest print in more than two years. The probability that the Eurozone will be able to avoid a recession seems minuscule.

The number of employed Canadians in October plunged -54K from +60.9K a month earlier. The unemployment rate ticked up to 7.3% from 7.2%. USDCAD jumped upon the announcement from 1.0110 to 1.0185. Even if equity markets continue to rise, return below parity seems unlikely for now.

The New York session kicks off at 8:30 am ET with eagerly awaited labor market data. October NFP is expected slightly lower at 97K from previous 103K while the unemployment rate is seen unchanged at 9.1%. Wednesday's ADP report bested expectations when it printed 110K so a positive surprise could materialize.

Canadian data include September building permits due at 8:30 am anticipated to grow 2.7% after plunging -10.4% in August. October Ivey PMI due at 10:00 am is seen unchanged at 55.7.

G20 set to conclude, Greece no confidence vote due, European Services PMI deepens further into contraction, RBA downgrades inflation and growth expectations, US employment report due.

Today's G20 meeting is set to conclude with new measures to boost the IMFs firepower. The rest of the communique is expected to reaffirm the action plan for global growth that made up the previous communique in September. Latest Premium Intermarket Insights on EURUSD, silver & US crude are below.

Tonight's no-confidence vote on Greece is expected to go ahead, with the likelihood that Papandreou will lose. There are also unconfirmed reports that PM Papandreou has brokered a deal with ministers to hand power to a coalition government if they help him win confidence vote. Meanwhile, the referendum idea appears to have been given up for now.

After yesterday's surprise ECB rate attention returns to economic data in Europe and this is expected to underscore the reasons for yesterdays long overdue action. The latest and final iterations of the October services PMI data for Germany, Italy, France and the Eurozone is due to be released. While German PMI is likely to remain in expansion territory at 52.1, all the others are expected to remain firmly in contraction territory at 45.5, 45 and 47.2 respectively.

Earlier this morning, Eurozone Oct services PMI deepened into contraction territory, falling to 46.4 from 48.8, while German Oct Services PMI edges up to 50.6 from 49.7

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The Reserve Bank of Australia explained its rate cut this week by saying that risks to growth remain skewed to the downside with China growth set to cool to an annual rate of between 8-9%, while the turbulence in markets from the European debt crisis is expected to weigh on sentiment. The bank cut its inflation and growth forecasts with core inflation set to remain within its 2%-3% target band until the end of 2013, while the economy should grow at close to average rates over the same period. The bank also expects to economy to grow between 3-4% between 2012 and 2013. This suggests that the likely next rate move is more likely to be down than up.

German factory orders for September are expected to recover slightly to 0.1% after Augusts sharp 1.4% fall while September factory gate prices are expected to slip back to 5.8% year on year.

Todays US payrolls report for October isnt likely to offer much comfort in that regard though jobs growth is expected. More on that in the US IMT.

Even a surprise rate cut from the ECB couldnt shake the market from its focus on Greece as risk assets rallied Thursday on signs that a referendum will be averted. AUD and CHF were the top performers while JPY and USD lagged. The Asia-Pacific session will focus on the G20 meetings in Cannes and the quarterly RBA monetary policy statement. Latest premium intermarket insights linked below.

The situation in Greece is constantly in flux and that was reflected in a 200-pip range in EUR/USD with a nasty chop that made for difficult trading.

PM Papandreou appears to have given opposition parties an ultimatum: vote in favour of the bailout deal or risk the referendum. IIn exchange for a positive vote, Papandreou may have agreed to step down and new elections will be called.

Before any of that can take place, a critical confidence vote will take place on Friday. If it fails, a snap election will be necessary and the euro will fall. Its unlikely the Greek government can finance itself through an election and its unclear if the troika will payout aid with Greece in limbo.

At this point, it appears that opposition politicians will support the confidence vote and the bailout on the condition that elections are called and/or Papandreou steps down. If this scenario unfolds, the euro is likely to continue to the upside on Friday.

The Greek referendum news overshadowed a surprise cut in the ECB main refi rate to 1.25%. In his first meeting as leader, Draghi said he sees slow growth heading toward a mild recession later this year.

EUR/CHF is getting close to the danger zone as it touched 1.2130 on Thursday. A break below the September low of 1.2116 would certainly trigger concern at the SNB.

In the US, economic data was mixed. The ISM non-manufacturing index fell to 52.9 from 53.0, missing the 53.5 expected. On the bright side, the employment index jumped to 53.3 from 48.7 in what is often a telltale indicator for non-farm payrolls. Initial jobless claims fell to 397K compared to the 401K expected.

Aside from Greece, the chief risk to sentiment is Italy where bond yields rose to a fresh euro-era record on reports of political turmoil and the failure to immediately implement economic reforms.

The S&P 500 gained 1.9% to 1261. With the ECB, Fed and RBA decisions now complete its clear that global central bankers have taken a dovish turn this week. The winner, in that sense, has been gold which broke out above $1752 on Thursday.

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Asia-Pacific Preview

The G20 meetings in Cannes continue. Proposals to injecting billions into the global economy via a special allocation of SDRs and advancing the IMF credit line proposal may boost confidence.

At 0030 GMT, the RBA will explain this week's rate cut at its the quarter monetary policy statement and update its assessment of the economy.

The latest news in the Greek Debt drama is that PM Papandreou stands eroding chances of surviving tomorrow's confidence vote, while any chances of any referendum (whether on EU or austerity) are shrinking by the minute. Here are the latest Premium Intermarket Insights of the day, with new chart on silver and EURUSD: http://ashraflaidi.com/products/sub01/access/?a=542 To get a trial account, click here: http://ashraflaidi.com/products/sub01/

G20 started today in France; Greek government closer to losing the confidence vote; UK PMI services rose but less than anticipated. Market turns to ECB's rate announcement and press conference and later to US ISM non manufacturing and factory orders.

The first day of the G20 summit started today in France with Greece as the main topic of negotiations yet again. It is remarkable how quickly the idea that Greece could leave the Eurozone became a real possibility. Markets are likely to respond to the latest headlines regarding possible investments into the EFSF.

The political situation in Greece is getting more serious as Eva Kaili, Greek socialist party lawmaker, announced she will not back the government in the upcoming confidence vote. Without her support, the governing majority shrank to a single seat. However, falling government could imply that the referendum could be cancelled which is currently contributing to the common currency strength.

In the UK, services PMI declined in October to 51.3 from 52.9. Even though the service sector did not contract, the expansion was weak which supports BOE view of growth risks and peaking inflation. Lower output and smaller new orders contributed to the decline. GBPUSD trades near session highs round 1.60.

The New York session is likely to be busy and volatile today. It starts at 8:30 am ET with jobless claims that are expected at 401K from last week's 402K. The reaction will be muted though as traders will wait for Eurozone rate announcement due 15 minutes later at 8:45 am and especially for new ECB's president Mario Draghi's first press conference that is scheduled to start at 9:30 am. Rates are generally expected to remain unchanged at 1.5% but there is a growing number of analysts who expect 25 bps cut. Few even anticipate 50 bps cut.

Considering how quickly and significantly fundamentals have deteriorated over the past few weeks, the probability of a rate cut is somewhat higher. Whether will Mario Draghi begin his eight year presidency with policy easing will the market learn shortly.

10:00 am will bring October ISM non-manufacturing that is seen slightly higher at 53.7 from 53.0 and factory orders that are expected unchanged in September from a -0.2% in August.

Greece referendum set for 4th December, ECB may cut rates today, UK Services PMI eyed next, China services PMI disappoints, US weekly jobless due later. 13 New trades from the Premium Intermarket Insights were added 5 hours ago including EURUSD, GBPUSD, USDCAD, US Crude oil, ES, DJ.

December 4 is the date set for the Greek referendum, though the phrasing of the question remain unclear. There was no debate about the decision by the IMF and EU to withhold the next aid tranche for Greece until after the vote. In a slight change of tone and emphasis, however both Merkel and Sarkozy said it was up to Greece to abide by the rules of the Eurozone or leave it.

After yesterdays manufacturing PMIs from Italy, France, Germany and the Eurozone showed that the European economy was flat lining, and even contracting sharply, expectations have been rising for an imminent rate cut from the ECB. At the beginning of the week this may have seemed unlikely but given this weeks volatility there is a small chance that we could see a 0.25% cut today. IF we dont get one we could see Mario Draghi face some tough questioning at his first rate meeting as President of the governing council, given that Trichet indicated last month that growth risks were to the downside.

Today's release of October UK services PMI should put the final piece of the PMI puzzle in place after this weeks rather mixed construction and manufacturing data. Contributing as it does to over 60% of the UK economy todays figure could well increase fears about the strength or otherwise of the UK economy, with expectations of a reading of 52, down from Septembers 52.9. A figure below expectations will add to recessionary fears we can expect to hear a chorus of I told you so from the Bank of England.

Last nights Chinese non-manufacturing PMI data for October slipped back from Septembers 59.3, coming in at 57.7. The data also showed that price pressures were starting to moderate on the back of uncertainty from Europe and the US.

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Australian retail sales data for September slipped from Augusts 0.6% rise, increasing by a mere 0.4%, and reinforcing this weeks decision to reduce rates by 0.25%, as consumers reined back on spending.

In the wake of last nights FOMC meeting todays weekly jobless claims arent likely to add too much to the debate about unemployment. Tomorrows non farm payrolls will do that after the Fed raised its unemployment rate forecasts last night and downgraded its growth forecasts for 2011 and 2012.

We're adding a fresh set of Premium Intermarket Insights as markets tumble in Thursday Asia following Merkozys refusal to grant Greece its 8 bln tranche before any referendum is carried out. A referendum is reportedly planned for Dec 4th. Were adding trades on GBPUSD, US crude (CL) Dow futures (DJZ), S&Pfutures (ESZ), EURUSD, EURJPY and more. Click here for direct access. http://ashraflaidi.com/products/sub01/access/?a=541 Non subscribers can click here to join http://ashraflaidi.com/products/sub01/

The Fed cut long-term growth forecasts on Wednesday as the situation in Greece deteriorated. The market reflected the numerous confused and often contradictory headlines out of Greece as the odd grouping of NZD, GBP and USD were the worst performers while CAD and EUR led. Australian retail sales are coming up in Asian trading. See our LATEST TRADES on AUDNZD & EURUSD ahead of Aussie retail sales.

International leaders appear to have lost patience with Greece as calls reigned down to put the situation in order. The EU and IMF said the aid tranche that was scheduled to be paid immediately was pulled off the table. Another report said China has nixed the deal to contribute to the EFSF.

The voluntary haircut to Greek bonds also appears in jeopardy with Reuters reporting that Greek debt holders may be forced to take the haircut, something that will trigger CDS. The referendum may come as soon as Dec 4 with Dec 11 as another option.

So far havent seen any recent polls analyzing how Greeks may vote but in the near-term these polls will be major market movers.

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The FOMC statement was mostly unchanged with a slight nod to the positive growth surprise in Q3. The latest Fed growth artists featured deep downgrades to future growth and employment.

The 2011 GDP forecast was knocked down to 2.5-2.9% from the June forecast of 3.3-3.7% and the 2013 forecast was downgraded along the same lines. The unemployment forecast was hiked to 8.5-8.7% from 7.8-8.2%.

In Bernankes press conference he was surprisingly dovish and said he would consider buying mortgage bonds if conditions are appropriate, weighing on the US dollar and boosting risk assets.

The S&P gained 1.6% to 1238. Gold climbed $18 to $1730.

Early in the Asia-Pacific session, New Zealand Q3 unemployment rose to 6.6%, missing the 6.4% consensus and sending NZD 40 pips lower.

Asia-Pacific Preview

The top event of the session comes at 0430 GMT when Australia releases retail sales data for September and Q3. Expectations are for rises of 0.4% and 0.6%, respectively.

The Fed kept rates unchanged, with the same schedule for its Operation Twist, but Chicago Fed chief Charles Evans was the only dissenter demanding more easing action. It is ironic, that the head of the Chicago Fed, the city of bond vigilantes (bond trades seeking to punish inflation by raising yields and selling bonds) is the only FOMC member demanding more easing. Historically, Chicago Fed Chiefs (such as former Chi Fed William Moscow) were among the most hawkish members of the US central bank. Bernanke will give his press conference at 14:15 EST (18:15 GMT/London), while Greek PMI Papandreou is meeting with Merkozy & the rest of the EU officials (at 16:30 GMT), followed by another meeting at then at 15:00 EST (19:00 GMT). Merkozy have reportedly told Papandreou that any referendum ought to be held before January and that central question should be whether Greece should stay in the Eurozone and European Union, rather than asking about the need to adhere to austerity. New Premium trades shall be issued near the US close. Meanwhile, see our current trade sin progress here: http://ashraflaidi.com/products/sub01/access/?a=539 NONsubscribers can join here: http://ashraflaidi.com/products/sub01/

Ashraf

Euro Stronger Despite Weak European PMI; ADP And Fed decision are due for today.

German labor market weak; European manufacturing PMI disappointed; UK construction PMI rose. Market turns to ADP and later during the NY session to interest rate announcement and the FED press conference.

The USD is mixed today. It is weaker against the EUR, CHF and JPY and slightly stronger against the other majors. European equities are in red by about 0.25%.

European data was disappointing today. The number of unemployed people in Germany increased by 10K in October after registering a 22K decline in September. The unemployment rate increased to 7% from 6.9%.

PMI data provided no reason for optimism either. Italian manufacturing PMI plunged to 43.3 from 48.3, French PMI increased slightly to 48.5 from 48.2 but stayed firmly in the contraction territory. German manufacturing sector contracted as PMI printed 49.1 from 50.3 and finally Eurozone PMI declined further to 47.1 from 48.5.

The outlook for Europe continues to worsen as even Germany, Eurozone's engine, faces serious fundamental deterioration. Contracting manufacturing sectors, weak labor market and poor confidence imply stagnation at best and the risk of a double dip recession increases with each disappointing data release.

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Meanwhile, the German-Italian 10 year spread reached the highest level since Euro inception as Italian 10 year yield continues to rise and trades at 6.17% which is by many analysts considered unsustainable. As has become the norm, the ECB continues to buy Italian and Spanish bonds.

In the UK, construction PMI surprised to the upside when October figure printed solid 53.9 from previous 50.1. GBPUSD briefly jumped higher from 1.6020 to 1.6050 but has since retraced all gains and trades below the pre-announcement levels.

The New York session starts at 8:15 am ET with October ADP report that is expected to increase to 102K from previous 91K.

TAKE NOTE: Bear in mind the interest rate announcement of the FOMC statement is due at 12:30 pm ET (16:30 GMT/London), followed by the Bernanke press conference at 14:15 (18:15 GMT/London). Traders will shift their concentration from Greece to the FED to search for QE3 clues. Any mention of QE3 remains unlikely and should the FED decide to bring up additional easing, it will probably emphasize that is will be contingent upon future developments. The fed funds rate will stay below 0.25%.

Merkel and Sarkozy set to meet Papandreou, Growth fears remain in focus as European manufacturing PMIs expected to remain weak, German unemployment set to fall, UK construction PMI set to follow manufacturing into contraction, US ADP and FOMC due later in the US. Link to latest Premium Intermarket Trades is below.

Greek Prime Minister Papandreou convinced his cabinet to back his referendum policy and make it one on euro membership. Obstacles still remain not least the PMs parliamentary majority which remains wafer thin. The Greek PM is due to meet Sarkozy and Merkel later today in Cannes to discuss the latest developments, where it is expected that they will make it clear that there is no alternative to last weeks deal. There has been speculation in some circles that the next IMF aid tranche could also be withheld if the referendum plans go ahead. In any case it remains uncertain if the Greek government will survive the week with a confidence vote expected by the end of the week, which suggests even more delay and uncertainty.

The upcoming Eurozone PMIs shall be accompanied by nagging worries of a double dip recession in Europe, with the final release of manufacturing PMI data for October, from Germany, France, Italy and the Eurozone with all of them expected to remain wither in contraction territory or quite simply stagnant. Italian PMI is expected to slide further to 47.2, increasing fears that Italy will be the next shoe to drop as its five and ten year bond yields surge through 6%. French manufacturing PMI is expected to come in at 49, while the German equivalent ifs expected to stay at 48.9, while the Eurozone measure is expected to post a flat reading of 50, though it is more likely it will come in lower.

German unemployment , on the other hand is expected to fall once again, this time by 10k while the unemployment rate is expected to stay at 6.9%.

Yesterdays disappointing UK manufacturing PMI numbers overshadowed the better than expected Q3 GDP numbers and raised fears that the last quarter of 2011 could see a contraction in the UK economy. Todays UK construction PMI is also expected to slip back into contraction territory to 49.8, from Septembers reading of 50. Despite yesterdays disappointing manufacturing reading of 47.4, the key indicator remains tomorrows services PMI because it makes up over 60% of the UK economy.

In the US the latest ADP numbers for October are due as is the latest monetary policy decision from the FOMC at its penultimate meeting of 2011.

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Aussie Retail Sales are due Thursday not this evening as stated in prev IMT. Disarray in Greek politics and a soft ISM report sparked a second day of risk aversion. USD and JPY were the top performers while AUD and CAD lagged. A 2nd edition of today's Intermarket Insights is added, including gold & AUDNZD.

The situation in Greece is confused and fluid. Yesterdays surprise referendum call has generated an enormous backlash among Greek politicians and the broader euro area. Calls for the resignation of PM Papadreou are growing louder within his own party amidst reports of defections in his razor-thin majority government. The euro rebounded midway through the session on a report that a Socialist Party member said the referendum idea is basically dead. At the end of the session, however, a Greek government spokesman said the referendum will go ahead.

A backlash is growing in the rest of Europe. Sarkozy has called a snap meeting with Papandreou and told reporters the bailout deal is the only way to fix Greece. The referendum appears to be a shock to other European leaders but all indications are that Europe remains committed to the plan announced last week.

The hit to sentiment was partly buffered by the IMF, who said it may introduce a six-month credit line for countries hit with a shock.

Money rushed into Germany with 10-year yields there falling a record 26 basis points and spreads across the periphery blowing out. Italian 10-year notes regained 6.0% after having never traded above that level until Monday.

Risk aversion was exacerbated by economic data and stunning revelations from MF Global. The ISM manufacturing index fell to 50.8 from 51.6. Expectations were for a rise to 52.3. Wall Streets reputation took another hit after MF Global revealed it used client funds for its own trading. The practice is illegal and will renew calls for regulation and oversight.

The S&P 500 fell 2.8% to 1218. Gold fell $5 to $1720. Oil fell $1.81 to $91.38.

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Asia-Pacific Preview

At 4:30 GMT September Aussie building approvals are expected down 4.5% after an 11.4% rise in August. The market is growing more sensitive to Australian economic data due to the uncertain path of interest rates.

An hour later, BOJ member Sayuri speaks in Yamanshi, he will hold a press conference at 0500.

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Risk aversion and Greek politics send Euro lower; Swiss PMI disappoints, UK PMI plunged and GDP data was mixed. EURUSD dropped below 1.37 testing its 100 WMA. ISM manufacturing and construction spending is next. Intermarket Insights will be due at 9 EST, 13:00 GMT.

The greenback soars across the board as heightened risk aversion that started yesterday continues. European equities are deeply in red, losing over 2%.

USD strengthening that started yesterday after BOJ intervention continued as MF Global filed for bankruptcy and Greek PM Papandreou announced a referendum to approve the EU bail out deal. The political damage that this step caused is likely to cause problems in future EU negotiations as Eurozone leaders must be troubled by the PM's decision. Strong a stable political situation in Greece, necessary for the implementation of the unpopular austerity measures, might come under pressure as confidence motion is scheduled to begin on Wednesday. EURUSD has lost nearly 500 points since Monday and fell to 1.3673.

Swiss data continues to deteriorate as SVME PMI declined further to 46.9 in October from 48.2 which is a second back to back contraction and the lowest print since mid 2009. The CHF was weakening even before the announcement and rumors were circulating that the SNB was checking rates. Any SNB involvement has been unconfirmed.

In the UK, manufacturing PMI plunged to 47.4 in October from 50.8. This is the weakest print since 6/2009 and it implies that the expansion, albeit a small one, we witnessed in September was only a temporary improvement amid deteriorating trend.

Today's GDP data was mixed: Q3 GDP grew 0.5% q/q stronger than previous 0.1% but annualized figure declined to 0.5% from 0.6%. Despite the q/q improvement, the outlook for the UK economy continues to be gloomy. GBPUSD fell on the news from 1.60 to 1.5930. Sterling continues to trade heavy near session lows.

The NY session will bring ISM manufacturing at 10:00 am ET that is expected stronger in October at 52.1 from 51.6 a month earlier. September construction spending is seen lower at 0.3% from 1.4%.

RBA cuts rates, Chinese manufacturing PMI comes in mixed, UK Q3 GDP and manufacturing PMI, Ashrf will be on AlArabiya TV at 10:35 GMT, 14:35 Dubai TV. All 5 Intermarket trades hit targets.

The 25-bp rate cut from the Reserve Bank of Australia wasnt entirely unexpected given the concerns raised at previous meetings with respect to the global growth outlook. Last weeks reading on core inflation may well have made up policymakers minds for them, coming in as it did at its lowest level for years. With concerns about a China slowdown and subdued consumer demand the RBA has decided to mitigate this with an easing of policy, especially as yearly house prices are also showing signs of cooling, down 2.2% in Q3.

Chinas manufacturing PMI continues to give mixed signals about the Chinese economy. There have been concerns that the economy, while slowing down wasnt in danger of a hard landing, however this mornings figures do raise a slight concern. The HSBC PMI numbers for October showed some improvement, coming in at 51 from the previous 49.9, but the official measure disappointed, coming in at 50.4, well below expectations of 51.8.

The first reading of UK Q3 GDP is seen +0.3%, from Q2s 0.1%. At around the same time the latest manufacturing PMI data for October is also due out with fears that the sector could well slip into contraction territory from Septembers 51.1 reading. The expectation is for a reading of 50, but given the October decision by the Bank of England to restart its asset purchase scheme, it does suggest that the Bank of England remains sufficiently worried to act quickly in an attempt to try and head off a slump.

Nationwide house prices showed an annual rise of 0.5% for October, reversing a fall of 0.3% in September.

All EURUSD, USDCAD and gold trades hit their targets. Our Intermarket Insights can be accessed directly here: http://ashraflaidi.com/products/sub01/access/?a=537 NONsubscribers can join here: http://ashraflaidi.com/products/sub01/.

In Europe the single currency has come under increased pressure after last nights surprise announcement of a referendum by the Greek PM on the new bailout package. Given the weak economic outlook more uncertainty is the last thing the market and the European economy needs in light of the OECD growth downgrade and comments yesterday. This uncertainty seems likely to continue now given that any referendum is unlikely to happen before the end of the year. The final October manufacturing PMI data from Germany and the Eurozone later this week are expected to be confirmed in contraction territory at 48.9 and 47.3 respectively.

Later in the day the Fed start their last two day meeting of 2011, while the latest ISM manufacturing data will be awaited for a continued improvement from Septembers surprise rise.

MF Global filed for bankruptcy, Greece launched a referendum and European periphery spreads continued to wide on Monday, sparking a strong risk off trade. On the day, USD and GBP led while JPY lagged on intervention followed by EUR. Markets price 80% chance of a 25-bp rate cut from the RBA tonight, with the risk for further potential yen intervention highlight Asian trading. All 2 EURUSD and 2 USDCAD Premium trades hit all targets, EURGBP nearing full targets, while gold short is in the money. See below for detail

The rosiness of the past month evaporated on Monday after reports that futures broker MF Global would be forced into bankruptcy after bad bets on European sovereign debt.

The declines were compounded late in the day when Greece PM Papandreou unexpectedly announced a January referendum on the EU bailout deal. Given the level of popular protest is seems highly unlikely the vote will pass and Greece will be forced to call snap elections, potentially sending the country into political chaos.

Concerns that Italy and Portugal will not be able to implement measures to qualify for EFSF bailouts drove yields higher and weighed on the euro. Italian yields hit 6.15% after cresting 6% for the first time on Friday.

It is not clear how much of the bond selling was driven by sovereign worries and how much was driven by the unwinding of MF Global positions in European debt. Other moves may have been exaggerated as well as MF Global floor traders were forced to rapidly close out all positions.

US economic data also weighed as the Chicago PMI fell to 58.4 from 60.4; a reading of 59.3 was expected. On the positive side, the employment component of the index rose to the highest since April.

The S&P 500 fell 2.5% to 1253 but rose 11% in October, the best month since 1991.

Our Intermarket Insights can be accessed directly here: http://ashraflaidi.com/products/sub01/access/?a=537 NONsubscribers can join here: http://ashraflaidi.com/products/sub01/

Asia-Pacific Preview

At 2330 GMT, the minutes of the most recent BOJ meeting will be released. The central bank increased its asset purchase program by 5 trillion to 5 trillion at the meeting.

The more pressing event risk comes from the Ministry of Finance, which may intervene for a second day. USD/JPY climbed to 79.50 in yesterdays trading but slipped back to 77.76 in US trading.

RBA Preview

Renewed worries on Monday may have been exactly what the RBA needed to push it over the edge and into rate cutting mode. The market is pricing in an 80% chance of a quarter-point cut. If the cut comes, AUD will initially fall about 30 pips but the secondary reaction will depend on the level of dovishness in the statement. If there is no cut, AUD will likely jump a half-cent but if the statement is overly dovish, those gains could disappear quickly. The decision comes at 0330 GMT.

EURUSD breaks below the important Sept 30 trendline on the DAILY chart (although not so on the WEEKLY chart). See what it means for the upcoming days ahead of ISM, ADP & NFP in our latest Premium Intermarket Insights. For DIRECT ACCESS, click here: http://ashraflaidi.com/products/sub01/access/?a=537 NONsubscribers can join here: http://ashraflaidi.com/products/sub01/

Ashraf Laidi

The UK and most Europe have the clock 1 hour back on Sunday, therefore London is now = GMT and both are 4 hours ahead of Eastern Standard Time (New York) until next weekend, when the US falls back 1 hour and the difference becomes 5 hours between EST and (GMT & London). The day's Premium trades are due ahead of today's London close.

Ashraf Laidi

BOJ governor's shocking words sends JPY higher; German retail sales rose but less than anticipated; Eurozone CPI higher and unemployment rate at 15 months high. Market turns to Canadian GDP and US Chicago PMI.

USD is the relative strength winner today as higher risk aversion combined with BOJ intervention sends the greenback higher across the board. European equity indices are in the red, losing about 1%.

After USDJPY hit another historical low at 75.35 earlier during the Asian session, Japanese officials decided to unilaterally intervene in the market and weaken the JPY. USDJPY jumped nearly 400 points from 75.55 to 79.52 within few hours. In subsequent press conference BOJ governor Shirakawa shocked the market when he said that JPY rise has merits for the Japanese economy. These surprising words erased nearly 200 points off the intervention effect as USDJPY plunged back to 77.80. If the Japanese ministry of finance hopes to have a lasting impact on the JPY rate, it will have to bring USDJPY back towards to highs swiftly otherwise we are likely to see pre-intervention levels within few sessions.

Premium Intermarket Insights has a SPECIAL EDITION on USDJPY. Get direct access for today's USDJPY trades at http://ashraflaidi.com/products/sub01/access/?a=536 To subscriber, click here: http://ashraflaidi.com/products/sub01/

German retail sales grew 0.4% in September from -2.7% in August which was still below analysts expectations of +1.1%. More importantly, annual figure dropped to 0.3% from 2.5%.

October Eurozone CPI inched up to 3.0% from 2.9% on annual basis and September unemployment rate rose to 10.2% from August 10.1% which is the highest rate in over a year. To make it worse, even the August figure was revised higher from an initial estimate of 10.0%.

The ECB is buying Italian bonds again in attempts to push the 10 year yield lower. It has been unsuccessful so far as the bond continues to yield over 6%, currently 6.08% reigniting fears that Italy could be the next victim of Eurozone's crisis. Even the expanded EFSF would not be able to provide significant financial aid, should Italy need it. Meanwhile in Italy, the consumer price level increased to 3.8% in October from previous 3.6%.

In the UK, Mortgage approvals declined to 51k in September from 52.3K in August and net consumer credit expanded GBP 0.6bln from GBP 0.5 bln

The NY session starts at 8:30 am ET with Canadian August GDP that is expected at 0.2% from 0.3% (2.2% from 2.3% y/y). Higher retail sales and relatively strong labor market could lead to a positive surprise and in that case the CAD could stay below parity for the next few weeks to come.

Chicago PMI is due at 9:45 am ET and is seen slightly lower at 59 in October from 60.4 in September and October Dallas manufacturing activity is anticipated better at -5 from -14.4.

Japan rocked FX markets by another intervention, China plays down Europeean hopes as Italy remains in the spotlight, German retail sales set to slip further, Eurozone and Italian CPI seen slowing, UK mortgage approvals slip back, US Chicago PM due.

The Japanese yen hit another post war high vs the dollar at 75.30s, prompting Japanese to intervene unilaterally for the first time since August.

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Last night's release of Nomura PMI data for October improved slightly from the previous months 49.3 coming in at 50.6.

If European leaders were hoping to find a white knight in China, their expectations were soon firmly tempered when the Chinese news agency Xinhua stated that "China can neither take up the role as a saviour to the Europeans, nor provide a 'cure' for the European malaise," it stated. "Obviously, it is up to European countries themselves to tackle their financial problems."

Fears about the continuing rise in Italian bond yields appear to be overshadowing the recent euphoria over last weeks bailout package as closer inspection on the deal reveals a number of obstacles to a successful outcome. Last weeks Italian auction saw 10 year BTP yields close above 6% for the first time since the launch of the euro and with the Italian government needing to raise another 42bn by year end, concerns are rising that Italy could be the next domino to fall, with the newly expanded EFSF unable to cope.

Todays economic data is expected to show that German consumers remain reluctant to spend with retail sales slipping in October from 2.2% in September to 1.6%. Eurozone and Italian CPI for October data is expected to show that inflation pressures continue to subside ahead of this weeks key ECB rate meeting, with EZ CPI for October expected to slip back to 2.9% from 3%, while Italian CPI is expected to fall back from 3.6% to 3.5%. Unemployment in the Eurozone is expected to stay at 10%, despite last weeks shocking Spanish numbers, showed that unemployment there hit 21.5%, and youth unemployment 45%.

In the UK the housing market continues remain under pressure after the latest Hometrack survey showed house prices for October fall 2.8% for October while mortgage approvals for September are expected to slow from the previous months 52.4k, coming in at 50.6k. The Lloyds barometer of business confidence also slid further to -15 in October.

In the US the latest Chicago Purchasing Manager index is due and expected to reflect the recent recovery in Michigan confidence numbers seen last Friday.

This is a special Premium Edition on USDJPY trades following the latest Japanese intervention. Regular Premium Intermarket Insights to return on Monday. DIRECT ACCESS for today's USDJPY trades: http://ashraflaidi.com/products/sub01/access/?a=536 To subscriber, click here: http://ashraflaidi.com/products/sub01/

Japan intervenes in midday Monday Tokyo trade, lifting USDJPY and EURJPY by nearly 400 pips each to 78.60s and 111.00 respectively. Yen Interventions have proven to be like Halloween costumes, with very limited duration before they lose their effect. The duration of the post-August intervention lasted 1 day. The duration the post-March coordinated intervention lasted about 2-weeks. The duration of the post-September 2010 intervention lasted 1 day. Rather than speculation on the DURATION of today's intervention, we focus on the PRICE. We expect USDJPY and EURJPY to extend moves into the US session, with various phases of bids & pullbacks. 79.30 & 79.80 appear to be the next key targets, with 77.50s and 77.10s likely to emerge as the key support levels. The objective (and hope) of the BoJ is to extend the impact into Fridays US NonFarm Payrolls (NFP), whereby a positive number, will be supportive for USDJPY. Premium Subscribers can view our August piece on USDJPY HISTORICAL CYCLES (still valid) for the key levels above/below which to consider placing stops and entries. DIRECT ACCESS to USDJPY piece here http://ashraflaidi.com/products/sub01/access/?a=466 To subscribe, click here: http://ashraflaidi.com/products/sub01/