Ireland downgraded by Fitch

It was a bit of a mixed session yesterday for the dollar, but it still managed to hold versus the Euro as a rating agency downgraded Ireland. Political uncertainty was reintroduced following the recent budget vote as the Irish government announced an upcoming vote in the EU/IMF package.

Among the US data, the initial jobless claims declined more than expected at 421k vs 425k.

USDJPY came off as US Treasury yields were slightly lower following a better than anticipated auction of $13bn 30y Treasurys, which prompted some short-covering as indirect bidders took down a higher than expected amount. Bank of Japan policy board member Morimoto said that one-sided dollar weakness seems to have subsided, although he warned that sharp FX volatility can have a large effect on the economy and so he is always watching FX moves carefully. He added that increasing the size of the BoJ's asset purchase facility is a strong policy option, and Bloomberg reported him saying that he hopes BoJ easing will have some effect on FX.

 BOE kept the rates unchanged last night, which was expected. UK trade deficit for October widened more than expected at 8.6bn versus 8.1bn.

Data Today

UK PPI – 9.30am GMT

US trade balance – 1.30pm GMT

University of Michigan confidence – 2.55pm GMT

US Monthly Budget statement – 7pm GMT