Peter Kretzmer, sr economist at Bank of America, says at the FOMC meeting, "forecasts for economic growth and inflation will be revised downward while the unemployment forecast will be revised upward. The FOMC will continue easing, most likely with a 25 BP move, although the recently low effective funds rate and futures market expectations raise the possibility of 50 BP. We expect consumer spending to continue declining in coming months."

The yen climbed to a 13-year high against the dollar as a worldwide rout in stocks encouraged investors to dump higher-yielding assets and pay back low-cost loans in Japan.
Japan's currency surged to the strongest in six years against the euro, posting its biggest gain ever, as the prospect of a deepening global recession prompted the unwinding of carry trades. The pound fell below $1.53 in its biggest drop in at least 37 years after the U.K. economy shrank in the third quarter, bringing it to the brink of recession. The dollar rose to a two-year high versus the euro as investors took refuge.
The pound depreciated as much as 5.9 percent to $1.5269, the lowest level since August 2002, after the Office for National Statistics said U.K. gross domestic product dropped 0.5 percent from the second quarter, the first contraction since 1992. Sterling's intraday decline surpassed that on Black Wednesday in September 1992, when the U.K. was driven out of Europe's exchange-rate mechanism. Against the euro, the pound weakened to a record 81.96 pence.
The yen gained against the Australian dollar versus the New Zealand currency on speculation the rout in global stocks will encourage investors to unwind trades in which they get funds in a country with low borrowing costs and buy assets where returns are higher.
The euro and the pound may weaken further because European and U.K. banks have five times as much loan exposure to emerging markets as the U.S. or Japan, with most lending to Eastern Europe, according to Morgan Stanley.
European banks' lending to emerging markets is about 21 percent of Europe's gross domestic product and U.K. banks' loans are around 24 percent of national output, compared with 4 percent for the U.S. and 5 percent for Japan, wrote London-based currency strategists Stephen Jen and Spyros Andreopoulos in a research note yesterday, citing data from the Basel, Switzerland-based Bank for International Settlements.
``Part of the reason why euro-dollar continues to drift lower has to do with the rising risk that pressures in Eastern Europe will have a negative boomerang effect on Euroland,'' the strategists wrote.

Brown believes BOE will look at further rate cuts

U.S. stocks slumped on Friday morning, joining the worldwide selloff on fears of a global recession, yet the major gauges managed to fight back from morning lows.
Stocks have been mostly lower this week as the credit crisis, sluggish corporate forecasts and slump in commodity prices exacerbated fears of a steeper slowdown. The weakness hasn't been limited to U.S. stocks, with markets in Asia and Europe tumbling this week as well.
Oil prices continued to slide, with crude dropping below $65 a barrel despite news that oil cartel OPEC is cutting production by 1.5 million barrels a day starting in November.
Investors had been braced for an even bigger selloff in the early going. Dow Jones industrial average futures fell 548 points, which triggered trading limits.
That prompted the New York Stock Exchange to post a statement on its blog confirming that trading would began as normal at 9:30 a.m. ET, saying it felt it needed to address widespread rumors that the open would be delayed.
On a positive note, a report showed sales of existing homes jumped more-than-expected in September, with investors taking advantage of lower prices. The report also showed that prices continue to fall.
U.S. light crude oil for December delivery fell $3.44 to $64.40 a barrel on the New York Mercantile Exchange after ending the previous session at a 16-month low.
Prices have been sliding since crude peaked at a record $147.27 a barrel on July 11. The decline since then has resulted from speculators pulling out of the market on bets that demand is slowing along with the global economy.
COMEX gold for December delivery fell 70 cents to $714 an ounce.
This week has brought the biggest wave yet of third-quarter corporate results. About 140 of the S&P 500 companies have reported.
With 34% of the reports out already, profits are on track to have fallen almost 10.9% from a year earlier, according to the latest estimates from Thomson Reuters.
After the close Thursday, Microsoft reported quarterly sales and earnings that topped forecasts. But the software leader also warned that sales and earnings for the fiscal second quarter and the full year won't meet forecasts due to the slowing economy. Shares fell 3.5%.
In other news, PNC is buying fellow regional bank National City in a $5.6 billion deal. National City's shares have been hammered over the last few months amid questions about its solvency following a series of bank failures and mergers.
Treasury prices rose, lowering the yield on the 10-year note to 3.60% from 3.54% Thursday. Treasury prices and yields move in opposite directions. At one point, the yield on the 30-year bond sank to the lowest point in its 31-year trading history, to as low as 3.87%.

«The home sales data is encouraging, but according to the National Association of Realtors, 35% to 40% of national home sales are foreclosure-linked. While it is encouraging that foreclosures are clearing the market, it results in even lower home prices."

"Lower house prices and lower rates on mortgages have boosted sales in September. Although rising sales of single-family houses are good news for the market, we would wait another few months before calling the end of the decline in housing activity."

Stocks are paring losses, but remain substantially lower. All ten of the economic sectors are down; each has lost in excess of 3%.
In a relatively isolated patch of green, airlines are up 2.5%, based on the Amex Airline Index. Airlines are being helped by a hefty 5% drop in oil prices. Oil futures currently trade below $65 per barrel.

Stock futures are limit down (S&P futures -52.80, Nasdaq futures -75.50). The tone in premarket action is decidedly negative. Dow and S&P futures are currently limit down, which is a mechanism to prevent stock futures from falling any further until the market opens. London's FTSE has shed more than 7% Friday, while France's CAC and Germany's DAX have dropped in excess of 8%. Hong Kong's Hang Seng is also down more than 8%, and Japan's Nikkei is down more than 9%.
Oil futures are currently down 7% to roughly $63 per barrel.
In corporate news, Microsoft posted upbeat revenue and earnings per share results, but issued downsided guidance. Fortune Brands announced better-than-expected earnings per share results despite a drop in revenue.

WTI Nymex crude oil now hitting 17-month low at $62.85 on talk of hedge funds unwinding long positions/deleveraging.

"The week of the 18th is also a survey week for the employment report. A survey week comparison reveals that initial claims increased by 20,000. The labor market is quite weak. Our preliminary projection is that October payrolls decline by 170,000 and that the unemployment rate rises to 6.3%."

The yen climbed to a 13-year high against the dollar as the prospect of a global recession prompted investors to dump higher-yielding assets funded in Japan. The dollar rose to a two-year high versus the euro.
The dollar advanced against every major currency except the yen as stocks tumbled after Samsung Electronics Co.'s profit slumped and Air France SA said it will be difficult to meet earnings targets.
The yen rose 7 percent this week against the dollar, the biggest gain since October 1998. It surged 14 percent against the euro, the biggest weekly advance since the 15-nation currency's 1999 debut. The euro headed for a 6 percent decline versus the dollar.
The pound fell to $1.5850, the lowest level since September 2003, bringing the week's decline to 8.3 percent, on speculation the Bank of England will lower interest rates to help avert a prolonged recession. Against the euro, the pound weakened to 79.84 pence, dropping for a fifth day, from 79.69 pence. U.K. gross domestic product contracted 0.3 percent in the three months through September.

EUR/USD having established low below a mark $1,2500, the pair was corrected in area $1,2580.
GBP/USD during a collapse of pair the low on $1,5264 then the rate has receded in area $1,5610 has been established.
USD/JPY after decrease in area Y90,90, the pair has receded above level Y93,00.

Unique data who should be expected today in second half of day, will be statistics on the market of the real estate of the USA - Existing home sales (September) 14:00 GMT. The average estimation of analysts on the given parameter makes 4,94 m, against value for the last month at a level 4,91 m.

Resistance 3: Y95.30
Resistance 2: Y94.50
Resistance 1: Y93.60
Current price: Y90.39
Support 1: Y90.90
Support 2: Y88.00
Support 3: Y84.50
Comments: The pair has established new to a low for last 13 years. The nearest support is the area of a session low on Y90,90. Below possible falling to Y88,00 and further to Y84,50 (area of minima of August and July 1995 accordingly). Resistance is presented by levels FIBO of today's falling: Y93,60 (38,2 %), Y94,50 (50,0 %), Y95,30 (61,8 %).

Resistance 3: Chf1.1830
Resistance 2: Chf1.1780
Resistance 1: Chf1.1720
Current price: Chf1.1532
Support 1: Chf1.1500
Support 2: Chf1.1420
Support 3: Chf1.1340
Comments: The pair has tested a level of 23,6 % FIBO of growth Chf1.0680-Chf1.1750 on Chf1,1500. Overcoming of the given mark will open road to area Chf1.1420 (area of a high of September 11). Below possible falling to Chf1,1340 (38,2 %). The nearest resistance is located in the field of a yesterday's high on Chf1.1730, is above located the peak on October 21 2007 on Chf1.1780. Overcoming of the given mark will open road to the top border of the ascending channel since July 17 on Chf1.1830.

Resistance 3: $1.5920
Resistance 2: $1.5785
Resistance 1: $1.5660
Current price: $1.5531
Support 1: $1.5260
Support 2: $1.5150
Support 3: $1.4850
Comments: The pair is consolidated after has been reached the low level for last six years. The nearest support is presented by area of a session low on $1,5260. Below are possible losses up to $1,5150 (area of low of July 2002) and further to $1,4850 (area of a low of October 2001). Resistance is presented by levels FIBO of today's falling: $1,5660 (38,2 %), $1,5785 (50,0 %), $1,5920 (61,8 %).

The yen climbed to a 13-year high against the dollar as the prospect of a global recession prompted investors to dump higher-yielding assets funded in Japan. The dollar rose to a two-year high versus the euro.
The dollar advanced against every major currency except the yen as stocks tumbled after Samsung Electronics Co.'s profit slumped and Air France SA said it will be difficult to meet earnings targets.
The yen rose 7 percent this week against the dollar, the biggest gain since October 1998. It surged 14 percent against the euro, the biggest weekly advance since the 15-nation currency's 1999 debut. The euro headed for a 6 percent decline versus the dollar.
The pound fell to $1.5850, the lowest level since September 2003, bringing the week's decline to 8.3 percent, on speculation the Bank of England will lower interest rates to help avert a prolonged recession. Against the euro, the pound weakened to 79.84 pence, dropping for a fifth day, from 79.69 pence. U.K. gross domestic product contracted 0.3 percent in the three months through September.

Resistance 3:$1.2810
Resistance 2: $1.2740
Resistance 1: $1.2690
Current price: $1.2576
Support 1: $1.2500
Support 2: $1.2460
Support 3: $1.2160
Comments: The pair, having fallen to a low level for last two years, has suspended decrease and has slightly receded from the reached levels. The nearest support is the area of a session low on $1,2495 / $ 1,2500. Overcoming of the given mark will open road to area of low of second half of 2006 $1.2480/60 movement. But that does not exclude probability of falling to $1,2160 (100 % of a projection of decrease $1.4862/1.3258). Intermediate resistance is the level of 38,2 % FIBO of today's falling on $1,2690. Above is located the mark of 50,0 % on $1,2740 (and also area of minima of Wednesday-Thursday), which overcoming will open road to $1,2810 (61,8 %).

CAC-40 is down 210pts (-6.34%), Xetra-DAX is down 319pts (-7.15%) and FTSE-100 is down 235pts (-5.74%).

Japan stocks tumbled a second day as the slowing global economy dragged on export growth, and the yen jumped to a six-year high against the euro.
Mazda Motor Corp. fell to a five-year low after Japan's exports rose a third of what was projected for last month. Olympus Corp., an endoscope maker that counts Europe as its biggest overseas market, sank 11 percent as the euro's slide diminished overseas sales. Inpex Corp., Japan's largest oil explorer, lost 7.1 percent after crude sank to a 16-month low. Tokyo Electric Power Co. added 2.6 percent as investors flocked to companies deemed resilient against an economic slowdown.
The Nikkei 225 Stock Average sank 213.71, or 2.5 percent, to close at 8,460.98 in Tokyo. The broader Topix index fell 17.53, or 2 percent, to 871.70. Stocks rebounded in the afternoon from a five-year low on a report the U.S. will move to stem foreclosures.
The Nikkei has tumbled 45 percent so far this year as the credit crisis triggered by the collapse of the U.S. mortgage market slowed global economic growth. Stocks in the gauge traded at 10 times trailing earnings, lower than the 18 price-to- earnings ratio of the Standard & Poor's 500 Index, which retreated to the lowest since April 2003 in New York yesterday.
Japan's Finance Ministry today said the nation's exports rose 1.5 percent in September, while economists had expected a 5.1 percent gain. The government this week acknowledged that the world's second-largest economy has probably entered its first recession in six years.


European stocks fell for a third day after ABB Ltd.'s orders slowed, Daimler AG cut its forecast and raw-material producers slipped on concern the global economic slump will curb demand for metals.
ABB, the world's largest builder of electricity grids, tumbled 18 percent after saying projects are being delayed by the financial crisis. Daimler slumped 1.3 percent as the world's second-biggest maker of luxury cars suspended its share buyback program. BHP Billiton Ltd. and Rio Tinto Group sank more than 6 percent as copper tumbled below $4,000 a ton.

Resistance 3: Y99.60
Resistance 2: Y99.00
Resistance 1: Y98.20
Current price: Y93.69
Support 1: Y92.80
Support 2: Y90.00
Support 3: Y88.00
Comments: The yen climbed to a 13-year high against the dollar as the risk of a global recession prompted investors to slash carry trades, in which they fund purchases of higher-yielding assets with Japanese currency. The yen rose 6.2% this week against the dollar, the biggest gain since October 1998. Sustained breach of Y95.75 confirm long term downtrend has resumed, extend falls to option barriers around Y95.00. Resistance is at 9 Oct, 19 March lows Y98.00. The rate plummets 200-points in dire liquidity to Y92.80 before spiking back to Y93.80 at time of writing. Option barrier at Y90.00 now coming into focus.

Resistance 3: Chf1.1830
Resistance 2: Chf1.1780
Resistance 1: Chf1.1720
Current price: Chf1.1700
Support 1: Chf1.1580
Support 2: Chf1.1400
Support 3: Chf1.1350

Comments: The rate keeps positive mood. The nearest resistance is located in the field of session and yesterday's high on Chf1,1720, above is located the high of October 21 2007 on Chf1.1780. Overcoming of the given mark will open road to the top border of the ascending channel since July 17 on Chf1,1830. Support is located in the field of session low Chf1.1580. Overcoming of the given mark will open road to former resistance Chf1.1400. Below there is a chance of return to area Chf1.1350 where there is a bottom border of the channel and in area of minima 14, 15, on October, 16th and 17 Chf1.1270/90.

Resistance 3: $1.6660
Resistance 2: $1.6460
Resistance 1: $1.6320
Current price: $1.5959
Support 1: $1.5960
Support 2: $1.5770
Support 3: $1.5610

Comments: Cable continues to move lower. As the nearest support acts the area of $1.5960/70 which represents 100 % of a projection $2.0135/1.7445 and 200 % $1.8795/1.7445. $1.5770 is 100 % a projection of decrease in September-October, and $1.5610 represents a low August-September, 2003. Resistance is in area of a last session high on $1.6320. Above is possible restoration to $1,6460 and further to $1,6660 (23,6 % and 38.2 % FIBO of falling $1,7520-$ 1,6130.

-- European Oct advanced services PMI at 46.9 vs 48.4 Sept
-- European Oct advanced composite PMI at 44.6 vs 46.9 Sept

flash Oct services PMI 49.7 -- lowest since June 1997 vs 50.2

Following selloff in Asian equity bourses overnight, European stocks are opening under pressure: CAC-40 is down 148pts (-4.47%), Xetra-DAX is down 227pts (-5.0%) and FTSE-100 is down 194pts (-4.72%).

Resistance 3:$1.3140
Resistance 2: $1.3040
Resistance 1: $1.3000
Current price: $1.2760
Support 1: $1.2750
Support 2: $1.2680
Support 3: $1.2470
Comments: The nearest support is presented by area of session and yesterday's lows on $1,2730/50. In the field of $1.2680/60 there are low of October-November 2006. The area of low of second half of 2006 $1.2480/60 in our opinion is represented a ultimate goal of current movement. The area of a session high on $1.300 is intermediate resistance. Above the purpose of growth becomes a level $1.3040 (38,2 % FIBO of falling $1,3530-1,2730 $). Overcoming of the given mark will open road to $1.3140 ( 50%).

-- Need To Factor Negative Econ. Into Policy Making
-- Econ. Data Shows Negative Econ. Forces Rising
-- Hopefully Can Avoid Deep, Severe Recession
-- Boe Sentance: Global Econ. Has Weakened In Last Few Months
-- Construction, Property Sectors Are Weakest

High Low Close
EUR/USD 1.3005 1.2725 1.2966
USD/JPY 98.31 95.91 97.98
GBP/USD 1.6345 1.6041 1.6305
USD/CHF 1.1700 1.1560 1.1581

EUR/JPY 127.30 123.12 127.08
EUR/GBP 0.7988 0.7835 0.7951
GBP/JPY 160.64 154.54 159.78
GBP/CHF 1.92061 1.8678 1.8886


Change % Change Last
Nikkei -213.71 -2.46% 8,460.98
Topix -17.53 -2.00% 871.70
DAX -51.37 -1.12% 4,519.70
CAC +12.69 +0.38% 3,310.87
Dow +172.04 +2.02% 8,691.25
NASDAQ -11.84 -0.73% 1,603.91
S&P +11.36 +1.27% 908.14
10yr Note -0.8400 -0.232% 3.534%
NYMEX Crude Oil +1.09 +1.63% 67.84
Gold -20.50 -2.79% 714.70

06:00 Germany Import prices excluding oil (September) Y/Y 4,1%
06:00 Germany Import prices (September) Y/Y 9,3%
06:00 Germany Import prices (September) -0,7% -0,8%
07:30 Germany PMI services (October) flash 48,7 50,2
07:30 Germany PMI (October) flash 46,2 47,4
08:00 Е15 PMI services (October) flash 48,2
08:00 Е15 PMI (October) flash 48,4
08:30 UK GDP (Q3) preliminary Y/Y 0,6% 1,5%
08:30 UK GDP (Q3) preliminary -0,2% 0,0%
11:00 Canada CPI excluding food and energy (September) Y/Y 1,2%
11:00 Canada CPI excluding food and energy (September) 0,1%
11:00 Canada CPI (September) Y/Y 3,5%
11:00 Canada CPI (September) -0,2%
14:00 USA Existing home sales (September), mln 4.92 4.91