USD: Higher, jobless claims fall more than expected, China may allow gradual Yuan appreciation JPY: Lower, MOF official warns that Japan's domestic economy remains weak, corporate outlook poor EUR: Lower, EU industrial production rises less than expected, upgrade of EU GDP outlook GBP: Lower, pressured by King’s statement that weak GDP will boost UK growth CAD and AUD: AUD & CAD lower, Australia posts better job growth, Canada’s house price index rises Overview USD traded higher Thursday supported by a dip in risk appetite as equities decline and China's PM Wen warns that the global economic recovery will be uneven. EUR traded lower despite positive EU industrial production data and of an upgrade of EU 2010 GDP outlook. AUD rallied to a new 15 month high in overseas trade supported by report better than expected Australian employment growth. AUD turned lower tracking weaker equity markets and a drop in the price of crude and gold. There is increased speculation that China may allow the Yuan to gradually appreciate. This could have significant implications for rebalancing of the global economy and help take some of the pressure off of the EUR and other currencies that are bearing the brunt of rebalancing. In addition there are reports that a number of central banks including Russia, Korea, the Philippines, Brazil and Thailand are buying USD to try and hold down the value of their currencies as USD weakness spreads. U.S. Treasury Secretary Geithner continues to try to talk the USD higher. Geithner said that the Obama administration is committed to a strong dollar and will take actions to reduce US deficits. Clearly intensified focus on Yuan appreciation and US deficits comes as President Obama heads to China but if China allows its currency to appreciate global rebalancing wont be solely dependent on a weaker USD. There was little reaction to the report that the IMF is reviewing possible reserve alternatives to the USD and may be looking at a basket of currencies to try to help reduce reserve accumulation. US jobless claims dropped to their lowest level since January and the four-week average is at its lowest level since November 2008. USD gave back some of its early gains after the release of the better than expected jobless claims but remained higher as stocks gold and crude oil trade lower. Today’s US Data: Jobless claims for week ending 11/07 fell 12k to 502k, a reading 510k was expected. Continuing claims also declined to 5.63mln. Continuing claims were expected to fall by 5.7mln.. Upcoming US Data: On November 13th October import prices will be released along with September international trade and November University of Michigan consumer sentiment. Import prices are expected to rise 0.5% compared to 0.1% last month. The trade balance is expected to improve -30.71bln compared to -31.50bln last month. Michigan consumer sentiment is expected at 73 compared to 73.7 last month..

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