Forex Fundamentals That You Might Not Know

Yesterday’s big news was UK GDP and US unemployment and durable goods, but there were a lot of local and regional data hitting the markets that might miss the headlines. This morning we rounded it all up. We started in Asia and ended in the US giving grabbing the headline events along the way.

South Korea’s economy grew at the slowest pace in three years as Europe’s debt crisis and a slowdown in emerging markets reduced corporate investment and capped demand for exports.

New Zealand’s annual trade deficit swelled to the widest since 2009 as exports fell to a 20-month low amid a decline in dairy shipments and a rising currency. New Zealand’s new central bank chief, in his inaugural address, signaled he wants a weaker currency without having to resort to unorthodox policy that may disrupt his efforts to contain inflation. The kiwi is a bit stronger on Friday.

Japan’s consumer prices fell for a fifth month in September amid speculation the Bank of Japan will revise down inflation forecasts next week as it struggles to end deflation and spur growth.

The yen touched a four-month low as a report showing Japan’s consumer prices declined for a fifth month added to prospects the central bank will expand monetary easing next week.

The rand strengthened for the first time in three days after South African Finance Minister Pravin Gordhan outlined plans to restrain spending over the next three years to help restore confidence in Africa’s largest economy.

Treasuries headed for a second weekly loss before a government report economists said will show consumer spending drove a pickup in gross domestic product growth.

The pound climbed the most in three weeks against the dollar after Britain’s economy expanded by more than analysts forecast in the third quarter, pulling the nation out of a recession.

The UK economy snapped out of recession by posting stronger than expected growth of 1% q/q in Q3, but the risk may well be that it dips back into contraction in Q4.

German government bonds declined, pushing 10-year yields to the highest level in five weeks, as speculation Greece will get additional funding damped demand for the region’s safest assets.

The Riksbank held its repo rate stable at today’s monetary policy meeting, however it noted that “it is now more probable that the repo rate will be cut rather than being raised during the winter” due to weakness in the Eurozone.

Italian retail sales came in flat at 0% m/m in August (consensus had expected a -0.2% m/m decline). The bigger picture story here is that the absolute level of Italian retail sales has fallen considerably over the past two years

The Commodity Futures Trading Commission will allow more swaps to be traded over the phone than initially indicated under proposed Dodd-Frank Act reforms, according to people familiar with the matter.

Oil was little changed after rising for the first time in six days in New York, ending the longest losing streak since May, on signs U.S. growth is accelerating. Futures fluctuated after rising 0.4 percent yesterday following reports showing U.S. jobless claims dropped last week and durable goods orders gained. The Commerce Department will probably report economic growth accelerated 1.8 percent in the third quarter, according to a Bloomberg survey.

Fitch may come out with a warning statement on a U.S. downgrade.

Data released yesterday provided some hope. US Labor Department figures showed initial jobless claims falling by 23,000 to 369,000 in the week ending October 20. That was better than the average estimate of 375,000. And durable goods orders also rose 9.9 percent from August, well above the average analyst forecast of 8.0 percent.

Orders for business equipment such as computers and communications gear stalled in September, signaling a slowdown in investment that may curb U.S. economic growth. Consumer confidence last week reached a six-month high as U.S. households became less pessimistic about the economy.

Today, market attention will focus on US GDP.