Canada CPI Declines for 4th Month; Swiss Retail Sales Growth Plants Sluggish Growth

Fundamental Headlines

• Euro Zone Posts Trade Deficit – Wall Street Journal
• ECB: Clunker Plans Are Risky Route– Wall Street Journal
• G7 Welcomes China Backing for Flexible Currency – Financial Times
• Japan Budget Requests Rise to Record $1 Trillion, Risking Debt Expansion – Bloomberg
• European Stocks Rise to Highest Level in a Year; U.S. Futures, Dollar Gain -Bloomberg

USD/CAD - Canada’s Consumer Price Index declined 0.9% in September from a year earlier, after falling 0.8% the month prior, and was in line with economic expectations. In detail, the report illustrated the largest monthly gain in household operations, gaining 0.5%, while food and shelter slipped 0.2%. At the same time, gasoline, car and clothing prices fell 23%, 5.9% and 1.2% respectfully. Going forward, the central bank is likely keep interest rates 0.25% at their up-incoming meeting October 20th as the data does not present any inflationary risks. However, the rise in core prices present concerns for the BOC and may shorten the time frame of mid 2010 for keeping interest rates at its current record low. To discuss this and other ideas, visit the USD/CAD Forum.

USD/CHF – Switzerland’s retail sales slipped 1.0% in August amid economists’ expectations of a 0.8% increase from the previous month. The data reinforces sluggish growth for the Swiss economy as sales shed 1%, with nominal sales declining 1.2% in a year. In particular, the report which was provided by the Swiss Statistics Office in Neuchatel illustrated a 10.7% plunge in clothing & shoes. The decline is likely led by consumers scaling back on spending while other purchasers remain cautious. Looking forward, investors anticipate retail sales will push lower by the end of the year as the SNB expects consumer prices to drop 0.5% this year. For more news and information, visit the Swiss Frac Currency Room.