Morning Forex Fundamental

Morning Forex Fundamental

EUR

'The situation is serious. There is still room for a deterioration in unemployment' - Ricardo Santos, an economist at BNP Paribas SA

Spain's unemployment rate hit new record in the Q3

Impact High

Spanish unemployment rate soared to a new record in the third quarter, as a worsening recession left more than one in four workers jobless. The Ministry of Labour said jobless rate rose to 25.02%, up from 24.6%in the previous quarter, while among workers aged 16-24, it was flat at around 52%. At the same time, 18.2 million in the eurozone are currently unemployed, with 5.8 million of them are Spaniards.

'The situation is serious,' said Ricardo Santos, an economist at BNP Paribas SA in London. 'There is still room for a deterioration in unemployment. Activity is weak and the government will reduce jobs as there are strict targets to adjust the number of public-sector temporary workers, especially in health and education.'

'In the space of just five years, unemployment in Spain has risen from 8% to now just over 25%,' said the BBC's Tom Burridge in Madrid on Friday. 'In parts of southern Spain, one in three of those looking for a job can't find one.'

The Stoxx Europe 600 Index added 0.10 per cent to 270.51. Germany's DAX Index rose 0.44 per cent to 7,231.85, while France's CAC 40 Index jumped 0.69 per cent to 3,435.09

USD

'The household side is doing better, that comes through pretty clearly' - Dean Maki, chief U.S. economist in New York for Barclays Plc

U.S. economy grew at a 2% rate in Q3

Impact High

The world's biggest economy sped up in the third quarter, paced by a pickup in consumer and government spending, the Commerce Department reported Friday. During the July-to-September period, nation's gross domestic product rose at a 2% annual rate after adding 1.3%in the prior quarter. The stronger-than-expected expansion of the economy may help President Barack Obama's message that the economy is recovering.

'The household side is doing better, that comes through pretty clearly,' said Dean Maki, chief U.S. economist in New York for Barclays Plc, who correctly forecast the rate of growth. 'Housing, which was in a deep hole, is also expanding. The fact that both of these are improving is an encouraging sign.'

'By any objective expectation, the most positive spin that can be put on today's report is that the economy may have improved modestly, but continues to struggle with lackluster growth in a disappointing expansion,' said Jim Baird, chief investment strategist at Plante Moran Financial Advisors.

The Standard & Poor's 500 declined 0.07% per cent to 1,411.94. The Dow Jones Industrial Average edged up 0.03% per cent to 13,107.21. The Nasdaq Composite advaced 0.06% per cent to 2,987.95

GBP

'The bank's capacity to generate profit enables us to set aside hefty real estate provisions in Spain in 2012 and significantly increase non-performing loan coverage' - Emilio Botin, chairman of Banco Santander

Moody's confirmed Santander UK debt and deposit ratings

Impact Medium

Moody's Investors Service has assigned A2/Prime-1 debt and deposit ratings of Santander UK Plc. on Friday. While the debt and deposit ratings for the U.K.'s third largest bank remained unchanged, the outlook is negative, reflecting Moody's medium-term view of lower systemic support for large U.K. banks. A day earlier, the bank posted its third quarter earnings, with profit dropping to just 100 million euros ($ 130 million), compared to 1.8 billion euros a year earlier.

'The bank's capacity to generate profit enables us to set aside hefty real estate provisions in Spain in 2012 and significantly increase non-performing loan coverage,' bank chairman Emilio Botin said in a statement.

'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.

The FTSE 100 Index added 0.03 per cent to 5,806.71. The broader FTSE All-Share Index inched lower 0.04 per cent to 3,034.74.

CHF

'The positive trend observed in recent months came to a halt. However, the outlook for the Swiss economy remains moderately positive' - KOF Swiss Economic Institute

Swiss KOF economic barometer lost impetus in October

Impact: Medium

Swiss KOF economic barometer fell less than initially predicted in October, pointing to a slowdown, as the crisis in the eurozone weighs on the country's economy. As reported by the KOF Economic Research Agency, its economic barometer, which predicts the direction of the economy over the following 6 months, inched down to 1.67 points in October, compared to 1.68 in the previous month. Analysts had predicted the KOF economic barometer to tumble to 1.63.

'The positive trend observed in recent months came to a halt. However, the outlook for the Swiss economy remains moderately positive,' the KOF institute said in a statement.

'The current level of the index paints too rosy a picture of Switzerland's economic outlook. A trend reversal can, however, be observed,' said Bernd Hartmann, head of investment research at VP Bank.

The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies, lost 0.09 per cent to 6,600.84. The broader Swiss Performance Index fell 0.01 per cent to 6,097.07.

JPY

'Things made in China for the domestic market will stay, but for things made in China to export, the advantages, starting with labour costs, are declining' - Wakamatsu, a Southeast Asia specialist at the government-affiliated Japan External Trade Organisation

Japanese government approved new stimulus

Impact: Medium

Japanese government approved a 423 billion yen ($5.3 billion) economic stimulus package on Friday to shore up economic growth. The size of the stimulus is double the size originally expected, and it is aimed to encourage capital expenditure in order to provide the economy with the boost in the range of 0.1 per cent. However, it is a relatively small amount of money to rescue the world's third biggest economy from the recession.

'The risk of a Japanese fiscal cliff is quite big,' said Soichi Okuda, chief economist at Sumitomo Shoji Research Institute in Tokyo. 'Without the passage of the bill, the government can't pay for necessary spending and the implementation of the budget will be delayed.'

'If they have an inflation goal of 2 percent or 3 percent they should pull out all stops to achieve it,' said Matthew Circosta, an economist at Moody's Analytics in Sydney, Australia. 'They've just got to be more aggressive than they are now,' he said.

The Nikkei 225 Stock Average lost 0.04% per cent, or 3.72 points, to 8,929.34. The broader Topix Index was down 0.13% per cent, or 0.93 points, to 740.30.