Daily Afternoon Report 09/11/2012

The U.S. dollar was broadly higher against most of its major counterparts on Friday, concerns over the handling of Greece's financial woes continued to weigh, while worries over U.S. fiscal policy also persisted.

The euro came under pressure after German Finance Minister Wolfgang Schaeuble on Thursday said next week may still be too early to make a decision on granting further aid to Athens, despite a successful vote on new austerity measures. But later on EUR/USD bounced ahead of U.S. data.

Official data showed that industrial production in France dropped 2.7% in September, more than the expected 1% decline, after a 1.9% rise the previous month, while, in Italy, industrial production tumbled 1.5% in September, compared with expectations for a 1.4% drop, after a 1.7% increase the previous month.

The dollar was also higher against the pound, since earlier in the day, the official data showed that the U.K. trade deficit narrowed more-than-expected in September, hitting GBP8.4 billion from a deficit of GBP10 billion the previous month.

The Aussie came under pressure after the Reserve Bank of Australia reduced its 2013 growth outlook to 2.75%, earlier in the day.

On the other hand, the export-linked currencies found some support after data showed that industrial production in China rose by 9.6% last month, more than the expected 9.4% increase and following a 9.2% rise in September.

Concluding, the overall market sentiment continues to be weighed by concerns over the U.S. fiscal cliff, automatic tax hikes and spending cuts due to come into effect on January 1 unless lawmakers can reach an agreement, which could threaten U.S. and global growth.

In recent U.S. news, consumer sentiment rose to its highest level in more than five years in November as consumers felt more optimistic about employment prospects and the outlook for the overall economy, a survey released on Friday showed. The Thomson Reuters/University of Michigan preliminary reading on the overall index on consumer sentiment came in at 84.9, up from 82.6 the month before. It was above the median forecast of 83 among economists polled by Reuters.

Daily Morning Report 09/11/2012 | Forex Trading Analysis

The Australian Dollar is trying a comeback after China's CPI print came at 1.7%, when a 1.9% was the consensus, and 5.5% was the number for Oct last year. Local share markets and SP500 futures are correspondingly having some relief rally after heavy losses in last 2 days.

The Bank of England decided not to increase the asset purchase target in November, although the spending on the stimulus measure is expected to be finished by the end of the month. The asset purchase target was kept at 375 billion Pounds; the interest rate was also kept at 0.50%.

The U.S. trade deficit unexpectedly narrowed in September to its smallest gap since December 2010, as exports rose to a record high. The U.S. Department of Commerce reported that the trade deficit shrank by 5.1 percent to $41.5 billion in September from $43.8 billion in August.

French Finance Minister Moscovici said he expects France to maintain a 0.8% growth target for 2013. He also said that it’s crucial to reach an accord on the Greek debt deal. Greek PM Samaras just accomplished to pass the austerity measure in the Greek parliament; the austerity measure is meant to win the approval for the next round of bailout funds.