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Easy Pips Daily Currency Update

Markets took a breather on Wednesday and the forex market was little changed. The euro and Australian dollar were being modestly higher when the U.S. dollar and Canadian dollar lagged as oil slumped.

News flow was light. European leaders keep trying to hammer out a backstop pertaining to Ireland. The Irish government asserts it does not need or wish to be bailed out so the money will most likely be funneled on to embattled Irish banking institutions. Growing expectations that something is going to get done has held the euro.

In the United States, 2 economic info factors aided to assist the Fed's introduction of QE2. The consumer price index was flat for the 3rd sequential month, excluding food and energy. Economists were looking for a reading of 0.1%. The absence of price demands suggest the Fed was right to head off a threat of deflation.

Similarly, Housing data in the United States persists to display no sign of a floor. Housing starts fell to an annual rate of 519K in October - the lowest since April 2009. Economists had been expecting a reading of 598K and the September data had been modified to 588K from 610K. The pipeline looks similarly bare with building permits increasing just 0.5% compared to the +3.9% envisioned. The market has already been conditioned to be expecting unquestionably no beneficial information from the housing sector so the reaction had been just about a ten pip drop in USD/JPY.

Fed policymakers talking over the prior day have unveiled the concept of additional quantitative easing, above of the $600 billion announced on Nov. 3. Chicago Fed President Charles Evans (non voter) stated the $600 billion plan is a "good place to start" whilst Boston Fed President Eric Rosengren (voter) says the Fed might need to contemplate doing more if the economic climate weakens. The remarks are helping risk appetite and stalling the U.S. dollar rally.

The top performer (narrowly) on Wednesday is the pound sterling. This arrives following claims for jobless benefits fell 3.7K in October compared to the +6.0K expected. The Bank of England's minutes showed a similar three-way split as last month with Sentance asking for rate hikes and Posen calling for more QE.

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