Week ending 28 November 2008. In a trading week with few fundamental announcements, further diminished by the U.S. Thanksgiving holiday, the E.U. proposed an economic stimulus package of EUR200Bn and the U.S. government planned bailouts for Citigroup and the frozen consumer credit markets. Although some equity markets rebounded, risk aversion and uncertainty remain high, and USD and JPY repatriation flows continue.

The RBA meets Tuesday and is widely expected to cut rates by as much as 100bps. The November DEWR skilled vacancies index fell by −4.8%, while 3Q2008 private capital expenditure rose 0.6% and October new home sales rose 4.5% m/m. AUD/USD rose on low volumes but remained within its current trading range between +/− 300 pips of 0.6300, closing the week at 0.6548.

U.S. 3Q2008 second-estimate GDP printed as expected at −0.5% q/q and personal consumption fell −3.7%. October new home sales dropped −5.3% m/m, existing homes −3.1%, and house prices by −1.3%. October durable goods orders are down −6.2% m/m, −4.2% less transportation, and the Richmond manufacturing index fell for the fifth straight month to −38.

The ECB meets Thursday and is widely expected to cut rates by as much as 50bps, the historic maximum; a deeper cut could weigh on EUR. Eurozone current accounts registered a deficit of EUR10.6Bn. CPI in November slipped to 2.1% y/y from 3.2% and unemployment ticked up to 7.7%. The German November Ifo index fell to 16-year lows, printing 85.8 for the business climate and 77.6 for expectations, while German 3Q2008 GDP as expected printed −0.5% m/m and 0.8% y/y. EUR/USD rose early in the week but could not force past resistance at 1.3100 and closed at 1.2700.

The BoE meets Thursday and is widely expected to cut rates by as much as 100bps, particularly as 3Q2008 GDP printed at −0.5% m/m and 0.3% y/y. Exports in the third quarter fell −0.3% while imports rose 0.1%. GBP had a strong week, rising 2.6% vs USD and 1.9% vs EUR on a rebound from November’s losses. GBP/USD respected resistance at 1.5520 while EUR/GBP respected 0.8550, closing at 0.8241.

Canadian September retail sales rose 1.1%, 0.8% less autos, far over market expectations. Current account balance of payments for 3Q2008 remained a surplus at CAD5.6Bn although the raw materials price index for October fell −12.5% atop the previous −7.3%. USD/CAD fell hard in the early part of the week only to stagnate for the remainder on thin trading, while AUD/CAD continued bouncing within its current range of 0.7850 ad 0.8150.

The RBNZ meets Thursday and is widely expected to cut rates by as much as 150bps. The October trade balance printed a deficit of NZD942Mn. October building permits are off −21.9% m/m and business confidence slipped further to −43. NZD/USD continues to trend lower, best seen on daily charts, while AUD/NZD trends higher, closing near resistance at 1.1950.

Japan’s October CPI printed at 1.7% y/y, 1.9% less fresh foods, and 0.2% less foods and energy. October household spending fell −3.5% y/y and retail trade by −0.6%, while October industrial production is down −3.1 m/m, −7.1 y/y, and vehicle production is down −6.8% y/y. USD/JPY despite an early bounce traded flat for the week. EUR/JPY again respected resistance at 125.80 while AUD/JPY rose 150 pips, mainly early in the week.