31.10.2008 12:33

Asian session: [M]

The yen and the dollar rose, heading for record monthly gains against the euro, as signs of a global recession prompted investors to sell higher-yielding currencies.
U.K. consumer confidence in October fell toward the lowest since at least 1974, London-based researcher GfK NOP Ltd. said today. The U.S. economy shrank in the third quarter by the most since 2001, data showed yesterday.
The yen remained higher after the BOJ lowered its benchmark rate to 0.3 percent from 0.5 percent, compared with forecasts for a cut to 0.25 percent. Governor Masaaki Shirakawa told a press briefing that the Japanese economy had clearly worsened this month and that three dissenters had wanted a quarter-point cut. One favored no reduction and four voted for the move.
The dollar gained versus the euro on speculation overseas investors in U.S. stocks cut bets against the greenback at the end of the month to keep their currency hedge ratios constant, according to Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto. The Standard & Poor's 500 Index is down more than 18 percent in October.
The European Central Bank participated in a coordinated interest-rate reduction by global central banks on Oct. 8 to prevent the collapse of the global financial system, reducing its benchmark rate by half a point to 3.75 percent.
Policy makers meet Nov. 6, when they will probably cut the region's main refinancing rate by half a percentage point to 3.25 percent, according to a survey of economists.
The British pound declined 8.4 percent this month, headed for its biggest drop since October 1992, on speculation the Bank of England will lower interest rates as the economy slows.
The U.K. will be trapped in a recession throughout next year and deflation may take hold if interest rates don't drop soon and ``significantly,'' BOE policy maker David Blanchflower said on Oct. 29.
The British central bank will lower benchmark rates by a half-point to 4 percent when it announces its next decision on Nov. 6, according to a survey of economists.

EUR/USD having tested a mark $1,2700, the pair has raised in area $1,2740.

GBP/USD having opened in the field of $1,6400, the pair has shown low in area $1,6150 then has slightly raised.

USD/JPY the yen could become stronger up to level Y96,30, then it was corrected in area Y96,80.

At 1000 GMT E15 Harmonized CPI (October) and Unemployment (September)is due.
US data starts at 1230GMT with the third-quarter 2008 Employment Cost Index, personal income, expenditures and PCE core price index for September. Personal income is expected to rise only 0.1% in September, as payrolls fell 159,000, hourly earnings rose only 0.2% and the average workweek was cut 0.1 to 33.6 hours. PCE is expected to fall 0.2% in September, as retail motor vehicle sales fell 3.8% and non-auto retail sales fell 0.6% on widespread declines. The core PCE price index is forecast to rise 0.1%.The ECI is expected to rise 0.7% in the third quarter, same as the previous two quarters.
At 1345 GMT the Chicago PMI is due, which is expected to fall to a reading of 48.0 in October from 56.7 in September . At 1400GMT, the Reuters/University of Michigan Consumer Sentiment Index is expected to be unrevised at 57.5 in late-October.