TODAY Oct 29-2012 FOREX IN REVIEWS

Mario Draghi has been quick to endorse the newest mission of the European Union, wider budgetary controls for the entire economic bloc. The plan, proposed by German Finance Minister Wolfgang Schauble, is intended to increase unity. While member countries are likely to resist yielding sovereignty over their budgets, this is expected to amplify confidence in the Eurozone. In the meantime, Mariano Rajoy's recent triumph in a regional election means Spain is likely to continue postponing a bailout. The consequence was a rise in Spanish 10-year yields to 5.6%. Equity markets closed mostly higher, led by the 0.69% rise in the French CAC 40 with the Euro Stoxx trailing, gaining 0.51%. The Swiss SMI and Spanish IBEX underperformed peers, dropping -0.09% and -0.05% respectively. EURUSD has dropped a marginal -0.08% to 1.2929.

Banking profits are dropping in China, led by the state owned banks as earnings across Asia are feeling the pinch in margins and global growth concerns. Earnings in global equity markets have shown resilience over the previous few quarters but are illustrating that no amount of cost cutting with keep the bottom line intact with slowing revenue growth. Risk assets across Asia declined with the Yen rebounding from multi-month lows before the slight weakening in the overnight session. USDJPY is up 0.06% to 79.690 while NZDUSD is down -0.22% and AUDUSD suffers a -0.16% decline. The Australian ASX is leading equity indices higher, climbing 0.29% while the Nikkei drops -0.03% followed by a steeper loss of -0.19% in the Hang Seng.

U.S. markets ended the week on a more positive note as GDP figures beat expectations coming in at 2.00% versus 1.90% expected and 1.30% prior. Consumer sentiment did weigh on the positive GDP figures. Equity markets showed a weekly drop as earnings disappointed traders and analysts alike. The Nasdaq and Dow Jones outperformed, rising 0.06% and 0.03% respectively while the S&P 500 dropped a modest -0.07%. Markets are awaiting the impact of Hurricane Sandy which is expected to land on the East Coast of the U.S. this week. Movement in the oil market should be expected as expanding U.S. supplies and weakening demand affect prices while the hurricane could prove an upside catalyst. WTI crude oil is trading slightly below the $86 handle at $85.96.
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