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Disappointing earnings reports from Apple and China Unicom sent Asian stocks sharply
lower today and risk aversion lifted the dollar and yen.
Improvement in the deflation reading also helped provide some support to the Japanese
yen for recovery.
The yen will likely be torn between expectation of Bank of Japan easing next week and a bit
of risk aversion and might go nowhere today.
Meanwhile, we'd possibly see other major currencies weaken against the dollar mildly today before
Q3 G-D-P data is released in the U-S: which might rock the markets.
Released from Japan, national C-P-I dropped .1% year on year in September, staying in
deflation while Tokyo C-P-I dropped .4% year on year.
Though, both are better than expectation of dropping .2% year on year and .5% year on
year respectively.
After all, as Japan remains in deflation, the expectation for the Bank of Japan to expand
it's monetary stimulus next week in its October 30th meeting is much higher.
There is still much to be done to achieve the 1% inflation target.
And if it happens, it will be the second time the bank has expanded it's stimulus in two
months.
In the U-S, there were some rumors that Fitch is going to downgrade its rating on US debts.
Fitch declined to comment but just referred enquiries to its July statement on U-S ratings.
There it said that the U-S's credit rating is unlikely to change before late 2013.
The rating agency will need to wait to *** the deficit-reduction plans following this
year's election.
Meanwhile, July's statement also noted that the U-S's top rating is underpinned by diversified
and productive economy, and financial flexibility from the dollar’s status as the reserve
currency.
In the Eurozone, Santander, Spain's biggest bank, urged the government to seek an international
bale out.
Chief executive Alfredo Saenz said that "a situation in which the Treasury funding is
being helped by contingency credit lines offered by any international body: will produce a
fall in the sovereign debt risk premium and, as a consequence, a fall in banks' risk premium".
Markets have so far been very quiet regarding Spain this week, and we'd need to wait under
November to have some developments.
On the data front, New Zealand trade deficit came in narrower than expected at minus 791
million New Zealand Dollars in September.
German G-f-k consumer sentiment for November improved to 6.3 and Import price dropped .7%
month on month in September.
The Swiss K-O-C leading indicator will be released today.
Meanwhile, U-S Q3 G-D-P will be the main feature today and is expected to show 1.8% annualized
growth.