In a light data week, the forex trading market opened on a strong note but was rocked midweek by risk aversion and protectionism from emerging economies fighting currency appreciation. Dealer chatter discussed a global and particularly U.S. economic “stall zone” as effects of government stimulus schemes wane.

Although the September Westpac leading index expanded 0.9% m/m, 3Q2009 wage cost index sank to a five-year low at 3.6% y/y and August average weekly wages to 5.2% y/y. Latest RBA meeting minutes emphasized the importance of supporting consumer and business confidence during the tightening cycle, leaving unanswered the question of a follow-up rate hike in December. AUD/USD lost 2.1% in the week on risk aversion and fell beneath the bullish trendline initiated 10 March, closing at 0.9154; retail traders note it has spiked and even closed beneath that trendline several times prior to this instance, but never before over a weekend.

U.S. October advance retail sales rose 1.4% m/m, 0.2% ex-autos, and 0.3% ex-autos and petrol, while October industrial production rose merely 0.1% m/m. October PPI was weaker than expected, printing 0.3% m/m, −1.9% y/y, with core prices −0.6% m/m, 0.7% y/y. October CPI printed 0.3% m/m, −0.2% y/y, with core prices 0.2% m/m, 1.7% y/y. October housing starts and building permits fell, weekly unemployment claims did not, and the ABC weekly consumer confidence survey stayed stubbornly low.

Eurozone October CPI printed 0.2% m/m, −0.1% y/y, and 1.1% y/y core. September construction output declined −1.1% m/m, −8.0% y/y. EUR/USD consolidated within its established range, edging down and closing at 1.4861.

In the U.K. October CPI printed 0.2% m/m, 1.5% y/y, and 1.8% y/y core. October retail sales surged 0.4% m/m, 3.4% y/y, mortgage approvals rose more than anticipated, and CBI industrial trends improved to −45. However, October public finances and borrowing were frightening at best and the BoE trends in lending report signalled ongoing business and consumer credit weakness. GBP/USD lost 1.0% on deficit woes, closing at 1.6507. EUR/GBP bounced from long-term support at 0.8825 and climbed to close at 0.8999.

Canada’s October CPI printed −0.1% m/m, 0.1% y/y, and core CPI 0.1% m/m, 1.8% y/y. September wholesale sales rose 0.2% m/m and manufacturing shipments 1.4%, while October leading indicators rose 0.7%. USD/CAD gained 1.8% on declining crude oil, closing at 1.0696. AUD/CAD consolidated, closing at 0.9791.

New Zealand’s 3Q2009 PPI contracted −1.1% q/q for inputs, −1.4% q/q outputs. October credit card spending increased 0.2% m/m, improving to −0.4% y/y. NZD/USD lost 2.7%, sinking through multiple support levels before closing at 0.7243. AUD/NZD also consolidated, closing at 1.2630.

Japan’s 3Q2009 preliminary GDP beat expectations at 1.2% q/q, 4.8% annualised. The BoJ surprised no one by leaving rates steady at 0.10%, but surprised many by shrugging off inflationary pressures and again raising economic forecasts, predicting rising exports will sustain production growth. Meanwhile, the September tertiary index fell −0.5% m/m, the all-industry activity index −0.6% m/m, and nationwide department store sales −10.5% y/y. USD/JPY lost ground but traded little changed in the week, closing at 89.02. EUR/JPY and AUD/JPY lost more significantly on risk aversion flows, closing at 132.29 and 81.48, respectively.