With most of the Northeast corridor bracing for Hurricane Sandy, it should be a quiet North American session. Slightly better than expected U.S. data provided very little excitement for the FX market but helped to keep the dollar bid against most major currencies. Personal incomes rose 0.4% in September, up from 0.1% the previous month and personal spending rose 0.8%, up from 0.5% in August. Incomes were right in line with expectations but spending grew at a faster pace last month, a trend that is not healthy for household finances but supportive for overall economy because consumers need to spend to get the economy going. Unfortunately the details of the report show real disposable incomes declining for the second month in a row and the savings rate dropping to its lowest level since November of last year. With the U.S. economy still growing at a lackluster pace and more consumers dipping into their savings to fund their spending, we could be looking forward to another challenging holiday season.
Stronger U.K. housing market numbers failed to help European currencies, which are under the greatest pressure this morning. A steep slide in Italian stocks and the overall decline in European equities have been pressuring the euro lower. After being convicted to 4 years of jail for tax fraud, former Italian Prime Minister Berlusconi threatened to withdraw his partyâ€™s support for Italian PM Monti, sending stocks sharply lower. Retail sales in Spain also plunged 10.9% last month, the steepest decline on a record after the government raised the VAT tax 3 percentage points to 21%. The big focus tonight will be the Bank of Japan monetary policy announcement. The market has priced in back to back increase in asset purchases, which would be a huge step for the central bank.
The NYSE floor is closed for trading today but stocks will still move because trading will be available electronically. Be safe and stay dry.