Daily US Opening News And Market Re-Cap: September 8

From RanSquawk

• The ECB kept its key benchmark interest rate unchanged at 1.50% as expected
• The BoE kept its key benchmark interest rate and asset purchase facility unchanged at 0.50% and GBP 200bln respectively
• The Italian Senate and the French lower house of Parliament approved measures to strengthen the EFSF
• The OECD sees annualised German GDP growth of 2.6% in Q3, and -1.4% in Q4

Market Re-Cap

EUR/USD traded lower during the European session as the market looked ahead to ECB Trichet’s press-conference following the rate-decision, where some analysts expect the central bank to portray a dovish tone. In other forex news, after trading lower for a vast majority of the session, GBP received a boost across the board after the BoE refrained from further monetary easing this month. The BoE kept its benchmark interest rate and asset purchase facility unchanged at 0.50% and GBP 200bln, respectively, as expected. Elsewhere, European equities traded higher during the session on anticipation of monetary easing by the ECB today. Financials traded higher, with outperformance seen in the Italian FTSE MIB and Spanish IBEX 35 indices, after the Italian Senate and the French lower house of Parliament approved measures to strengthen the EFSF. However, DAX came under pressure following a sharp decline in German exports.

Moving into the North American open, apart from the ECB’s rate announcement followed by Trichet’s press-conference, markets look ahead to key economic data from the US in the form of jobless claims and trade balance. Canadian trade balance and housing data is also scheduled for release later. In fixed income, 3-, 10-, and 30-year Note refunding announcement from the US is due later, whereas markets will keep a close eye on comments from Fed’s Bernanke.

Asian Headlines:

Fitch Ratings warned on Thursday that it might downgrade the credit rating of China within two years and there was a greater than even chance of a downgrade of Japan's credit status. Andrew Colquhoun, head of Asia-Pacific sovereign ratings at Fitch, said that China's local currency debt rating could face a downgrade over the next 12 to 24 months. He added that there was a greater than even chance Fitch will downgrade Japan's credit rating because of the country's public debt, which is running at about twice the size of the USD 5trl economy. (RTRS)

In other news, PBOC’s governor Zhou said there is no clear timetable for CNY convertibility in capital accounts, adding that global imbalances need international coordination. He also said that countries should consider the impact of monetary policies on global liquidity. (RTRS)

Also, Fitch warned that it might downgrade China’s credit ratings within two years. It also said that Japan faced a greater-than-ever chance of a downgrade. (RTRS)

US Headlines:

Federal Reserve officials are considering three unconventional steps to revive the economic recovery and seem increasingly inclined to take at least one as they prepare to meet this month, according to Jon Hilsenrath. One step getting considerable attention inside and outside the Fed would shift the central bank's portfolio of government bonds so that it holds more long-term securities and fewer short-term securities. A second step under consideration at the Fed, one getting mixed reviews internally, would reduce or eliminate a 0.25% interest rate the Fed currently is paying banks that keep cash on reserve with the central bank. A third step Fed officials are debating would involve using their words to make their economic objectives and plans for interest rates more clear. "QE3" remains an option, but it appears the first step would be to extend the maturity of the Fed's portfolio. (WSJ)
EU and UK Headlines:

German Trade Balance (EUR) (Jul) M/M 10.4bln vs. Exp. 11.5bln (Prev. 12.7bln)
German Exports SA (Jul) M/M -1.8% vs. 0.5% (Prev. -1.2%)

EQUITIES

European equities traded higher during the session on anticipation of monetary easing by the ECB today. Financials traded higher, with outperformance seen in the Italian FTSE MIB and Spanish IBEX 35 indices, after the Italian Senate and the French lower house of Parliament approved measures to strengthen the EFSF. However, DAX came under pressure following a sharp decline in German exports. Moving into the North American open, equities continue to trade higher, with financials and oil & gas as the best performing sectors.

FX

Currencies were relatively subdued in early European trade as today’s key rate decisions remained in focus.  Overnight weakness was observed in the AUD following weaker than anticipated employment data from Australia.  As the session progressed strength in GBP slowly built with a distinct spike higher before the rate decision amid speculation of an early leak from the BoE of no further QE.  Conversely, EUR has weakened across the board with market talk of corporate names selling the currency.  The CHF has fallen against its pairs amid speculation that the SNB has been checking forward rates and market talk of Middle Eastern buying in EUR/CHF.

•    Australian Employment Change (Aug) M/M -9.7K vs. Exp. 10.0K (Prev. -0.1K, Rev. to -4.1K)
•    Australian Unemployment Rate (Aug) M/M 5.3% vs. Exp. 5.1% (Prev. 5.1%) (RTRS)

COMMODITIES

WTI and Brent crude futures lacked any firm direction in early European trade, strength in USD-Index has weighed on prices with participates looking ahead to the DOE Inventories release expected later in the session.

Oil & Gas News:

•    Iraq aims to add 900,000 BPD of refining capacity and seeks USD 30bln for five refinery projects.

Geopolitical News:

•    Gaddafi denies reports he fled to Niger In new audio message, in which deposed Libyan leader condemns "psychological warfare" and calls NTC a front for Western powers.
•    Deaths are reported in 'fresh Syrian assault' with at least 21 killed in tank-backed raid on Homs, a day after 2,000 people held anti-regime protests, according to activists.

Full report:

Comments

[oobrien]

The news?

It's bad.

Is there any hope?

Of course not.

So what's a boy to do?

Run to the hills!

http://geraldcelente.proboards.com

[Quadlet]

Is the Fed proping up EUR/USD?  It appears that the Fed has acted to keep the pair above 1.40.  Will this time be different?  Remember what happened in the past when we tried to help Europe with monetary policy?