Morning Forex Fundamental

Morning Forex Fundamental

EUR

'Progress isn't conclusive, there is a huge amount of uncertainty in Spain right now' - Ebrahim Rhbari, a London- based economist at Citigroup Inc.

Spain's economy contracted for the fifth consecutive quarter

Impact High

Spanish economy contracted for the fifth consecutive quarter, increasing pressure on country's Prime Minister Mariano Rajoy to ask Europe for financial help. Gross domestic product tumbled 0.4 per cent during the three months through September, matching the same contraction of the second quarter. Analysts had predicted Spanish economy to shrink 0.7 per cent in the third quarter of 2012.

'Progress isn't conclusive, there is a huge amount of uncertainty in Spain right now,' said Ebrahim Rhbari, a London- based economist at Citigroup Inc. 'There are question marks about the banking sector and public finances and economic fundamentals suggest we will see a bailout sooner than later.'

'Maybe next year will be the year for Spain,' Ross said in an interview in Abu Dhabi. 'They're just now beginning to recognize the magnitude of the problems. Until now they've been in total denial of the problems.'

The Stoxx Europe 600 Index erased 1.67 per cent to 268.40. Germany's DAX Index tumbled 2.11 per cent to 7,173.69 and France's CAC 40 Index declined 2.20 per cent to 3,406.50

USD

'The housing market is on the mend, but the housing bottom will be a protracted one' - Zillow Chief Economist Stan Humphries

U.S. home values rose 1.3% in Q3

Impact High

U.S. home values recorded its biggest gain since 2006, a sign the nation's property market is recovering. According to the Zillow, a real estate information service, the average price of the house rose 1.3% to $153,800 in the third quarter of 2012, up from $151,800 in the previous three months. However, the pace of recovery was uneven across the nation, with a 5.9% increase in Phoenix, while Atlanta posted the biggest drop in values, falling 2.2% from the previous three months.

'The housing market is on the mend, but the housing bottom will be a protracted one,' said Zillow Chief Economist Stan Humphries. 'We will see more muted appreciation in the near term before we get back to normal appreciation trends.'

'We're likely to see home values fall back into the negative range in some markets due to the close of the traditional home-buying season.'

The Standard & Poor's 500 plunged 1.44 per cent to 1,413.11. The Dow Jones Industrial Average tumbled 1.82% per cent to 13,102.53. The Nasdaq Composite declined 0.88% per cent to 2,990.46.

GBP

'The continuing economic uncertainties both in the UK and in the euro area are having a dampening effect on activity within firms and households' - BBA statistics director, David Dooks

U.K. mortgage approvals rose in September

Impact High

The total number of new mortgages approved in the U.K. rose more than expected last month, hit by the global slowdown, the British Banker's Association said Tuesday. Mortgage approvals, which are a leading indicator of housing market activity, jumped 1.6 per cent to 31,175 in September, up from 30,683 in the previous month.

'The continuing economic uncertainties both in the UK and in the euro area are having a dampening effect on activity within firms and households,' said BBA statistics director, David Dooks.

'Households are reducing borrowing requirements and have no appetite to take on more/new debt. Where they can, individuals are putting money aside for household expenditure. Firms are holding back on borrowing for investment until trade prospects improve.'

The FTSE 100 Index lost 1.44 per cent to 5,797.91. The broader FTSE All-Share Index inched lower 1.40 per cent to 3,029.81

CHF

'We are responding to this changed environment and the weakening economic outlook by adapting our business and increasing efficiency' - Oswald Gruebel, UBS chief executive

Swiss banks to cut a total 7,000 Jobs

Impact: Medium

Major Swiss banks such as UBS and Credit Suisse are going to make around 7,000 employees redundant, as part of cost-saving measures in order to increase profit, the Der Sonntag newspaper reported Tuesday. UBS is to cut 3,000-5,000 jobs, while Credit Suisse may fire 1,000-2,000 workers. Banks worldwide are implementing cost-cutting measures to meet new capital requirements in times of a sharp global slowdown.

'We are responding to this changed environment and the weakening economic outlook by adapting our business and increasing efficiency,' said Oswald Gruebel, UBS chief executive.

'We therefore do not envisage material improvements in market conditions in the third quarter of 2011, particularly given the seasonal decline in activity levels traditionally associated with the summer holiday season, and expect these conditions to continue to constrain our results.'

The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies, fell 1.78 per cent to 6,626.79. The broader Swiss Performance Index lost 1.71 per cent to 6,112.81

JPY

'There is increasing downward pressure on Japan's economy. It is urgent that we take measures to ensure an early escape from deflation and to ensure economic growth' - Japanese Finance Minister Koriki Jojima

BoJ to announce fresh stimulus

Impact: Medium

The Bank of Japan is likely to expand its asset-purchase fund to bolster economic growth, as the government piled fresh pressure on nation's central bank. During the next meeting at October 30, the BoJ is expected to cut its growth forecasts, as well as review its benchmark interest rates. The BoJ has already increased the size of its asset-purchase program by JPY10 trillion ($127 billion) to a total of JPY80 trillion.

'I hope to continue calling on the BOJ to pursue powerful monetary easing to achieve at an early date its 1 percent inflation target,' Economics Minister Seiji Maehara said on Tuesday.

'There is increasing downward pressure on Japan's economy. It is urgent that we take measures to ensure an early escape from deflation and to ensure economic growth,' said Finance Minister Koriki Jojima.

The Nikkei 225 Stock Average lost 0.17% per cent, or 15.39 points, to 8,998.86. The broader Topix Index retreated 0.36% per cent, or 2.69 points, to 746.68.