Market Wrap - 16 November 2007

USD: The U.S. dollar rose against the Euro but slid against the yen on Thursday, as ongoing credit market concerns and weak stock markets led investors to pare back on short positions in the greenback. Uncertainty about losses from the U.S. subprime mortgage crisis continued to pervade markets. Data showing benign U.S. core inflation in October and higher-than-expected regional U.S. business activity in November did not have lasting impact on currencies.

EUR: The Euro traded down slightly overnight on the back of a stronger dollar with the exception of Yen. On the data front, the final October Eurozone HICP inflation estimate came in at 2.6% y/y, in line with expectations but up from the previously reported 2.1%

JPY: The yen was little changed on Friday as weaker Asian stocks quelled risk demand, helping the Japanese currency hold gains made against higher-yielding ones in the previous session. The low-yielding yen rallied on Thursday when sluggish stocks and ongoing concerns about the health of major financial institutions prompted investors to trim risky carry trades that involve selling the yen for assets in high yielder’s. The Nikkei stocks average slipped 1.6 percent in early trade, taking a cue from U.S. stocks, which sank on Thursday on worries that credit losses from mortgage defaults and slumping home prices could worsen, hurting the economy.

AUD: The Australian dollar traded weak, holding just above this week's lows, as investors stayed clear of high-yielding currencies on persistent concerns about the fallout from the U.S. subprime mess on the economy and financial markets.

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