Euro Below $1.38, Greek Default Chatter Re-emerges

German CPI revised higher; UK PPI input prices fell; Canadian labor market deteriorated. Chatter of a Greek report doing the rounds. Ashraf's BNN interview on why Fed's Twist Operations shall shall fail t prop the euro.

USD is higher across the board amid high risk aversion and weak equity markets. The selloff in the Euro continues and EURUSD fell to 1.3788 even as German final CPI was revised up to 0.0% after earlier estimate of -0.1% (2.4% y/y). Even French Industrial production that unexpectedly rose and showed a robust 1.5% growth in July failed to underpin the euro.

UK PPI input prices dropped 1.9% in August after 0.5% in July experiencing the largest decline since April 2009. On annualized basis they grew 16.2% after 18.3% previously. GBPUSD dropped to below 1.59 but has since recovered a part of the loss.

Japanese Finance minister Azumi said during today's G7 meeting in France that he continues to monitor exchange rates and will take bold action if there are excessive moves. Interventions will undoubtedly be discussed during the G7 meeting as Canadian Finance minister Jim Flaherty said that he was concerned about unilateral actions of Japan and Switzerland that intervened in the currency market to weaken their respective currencies. Should Japan reach a consensus, Japanese Monday morning might be the ideal time for such an intervention to occur. Japan spent almost USD 60 bln during August failed intervention.

Canadian employment fell by 5.5K in August after a July rise of 7.1K, with the

unemployment rate up 0.1% to 7.3%. Ashraf's Premium trade to short CADJPY remains in progress. http://www.ashraflaidi.com/products/sub01/access/?a=490

August Canadian Housing starts fell to 184.7K in August from 205K vs exp 200K.

Ashraf's 7-minute interview on the set of BNN, discussing intermarket dynamics, euro outlook, gold, silver, oil & Fed policy http://watch.bnn.ca/#clip528927