EURUSD Hovers Around 1.29; CAD Retail Sales Next

BOE will publish data regarding FLS in December; GFK consumer climate unchanged; UK BBA mortgage approvals rose; Spanish auction. Canadian retail sales; SP case shiller and consumer confidence are next.

The USD has been bid throughout the London session. EURUSD was oscillating around the 1.29 handle and USDJPY grinded lower to 77.66 which pushed EURJPY about a dozen points above the 100.00 mark. European equities are losing around 0.25% and relatively weakest is CAD.

MPC member Paul Fisher said today that the OMT along with QE3 underpinned market confidence but warned that central banks can only give governments time and space. He also said that significant number of banks are close to Funding for lending scheme (FLS) sign up and that the BOE will publish its first data regarding the FLS in December. GBPUSD first pushed higher to 1.6267 but later fell back to 1.6225.

On the data front we learned that GfK German consumer climate for October remained unchanged as expected at 5.9; UK BBA mortgage approvals rose in August to 30.5K from 28.7K in July and Swiss UBS consumption indicator fell sharply lower in August to 1.03 from previous 1.48.

Spain sold 3 and 6 month bills totaling EUR 3.98 bln vs. EUR 3-4 bln target. The average yields rose and bid to cover declined on both bills. The 10 year yield rose today to 5.75%.

The US session begins at 8:30 am ET with Canadian retail sales that are expected to rise 0.2% in July after 0.4% decline seen in June. Core sales are seen at 0.3% from -0.4%.

S&P case-shiller house price index is due at 9:00 am and it is seen 1.3% higher in July from previous 0.5%. September consumer confidence at 10:00 am is anticipated to rise to 63.1 from 60.6. Markets are also awaiting the ECB president Draghi's speech at 9:00 am in Berlin and the treasury secretary Geithner's speech at 1:30 pm.

Patrik Urban