Market Rumours

GBP/USD's resilience above $1.63 may re-open a test of $1.65 Wednesday, says UniCredit. However, with the BOE likely to expand QE Thursday the bank says it would be cautious about going long, and instead it favors a tactical trading stance. GBP/USD now trades at $1.6486.

True state of British economy - Official figures show Britain's economy shrank for a sixth consecutive quarter between July and September, making the current recession the longest since the Second World War.When Bank of England policymakers meet this week to discuss whether to pump more money into the economy they will have to piece together some contradictory data.Private surveys, on the other hand, suggest the economy has not just stabilised but is expanding. Retail sales are growing at their fastest rate since December 2007, consumer confidence is on the up and even manufacturing is expanding at its fastest pace in two years.This dichotomy poses a headache for BoE watchers. They must not only make a judgment on the true state of Britain's economy but also on which pieces of data the central bank is likely to prioritise.

If you made profit from yesterday's gold price hike & currencies drop then thank indian government.India’s decision to exchange $6.7bn for gold equivalent to 8 per cent of world annual mine production sent the strongest signal yet that Asian countries were moving away from the US currency. Gold prices on Tuesday surged to an all-time high after India’s central bank bought 200 tonnes of the precious metal, swapping dollars for bullion as the country’s finance minister warned the economies of the US and Europe had “collapsed”.

Warren Buffett on Tuesday struck the biggest deal of his life with the $26.6bn purchase of Burlington Northern Santa Fe, one of the largest US railroad operators, in what the billionaire investor called an “all-in wager” on America’s economic future.The cash-and-shares deal by Mr Buffett’s Berkshire Hathaway, which already has a 22.6 per cent stake in BNSF, caps a long search by the legendary investor for an “elephant” deal to deploy his vast cash pile.

Spot gold moving up in all currencies overnight strongly bullish signal, says Under The Southern Cross brokerage. Move is boon to Australian gold miners with production capacity in country, which have somewhat missed out on gold's record rally in U.S. dollar terms, as AUD gold stayed relatively steady. Expects gold to shine in current environment of global government stimulus, large-scale equity issuance; points out gold cannot be printed, and hence gold holdings cannot be diluted. Spot gold pares some gains on profit taking after rallying some $25 overnight, trading at $1,080.50/oz, down $3.80 vs NY close.

USD/JPY may fall as Japanese players return from holiday; players unwilling to buy USD aggressively ahead of FOMC statement later in day, also due to possibility of weakness in stock markets stemming from renewed concerns for some financial firms, says Tokyo Forex and Ueda Harlow senior manager Masanobu Ishikawa. Says if Japanese stocks decline, pair may fall due to risk aversion. Tokyo bourse could get negative steer from broad Asian share weakness Tuesday, also DJIA's 0.2% slip. Expects relatively dovish FOMC statement, to signal Fed unwilling to hike rates anytime soon; that could also push USD down, he says. USD/JPY may trade in 89.50-90.60 range vs last 90.28. EUR/USD may trade in 1.4650-1.4750 range vs last 1.4718. EUR/JPY may trade in 132.40-133.40 band vs last 132.89.

AUD/JPY falls due to weaker than expected Australian retail sales data (0.2% drop in September vs 0.4% gain expected), says senior sales dealer at major bank in Tokyo. Adds risk-aversion moves also push EUR/JPY down, resulting in stronger JPY vs USD as well. USD/JPY may fall to 89.75 vs last 90.19, EUR/JPY may fall to 132.00 vs last 132.66, AUD/JPY may fall to 80.50 vs last 81.15.

The Federal Reserve was widely expected to stand pat on rates later, but investors were focussed on the Fed's commentary on the U.S. economic outlook and any hints at when it could tighten policy. UBS head of institutional sales George Kanaan in Sydney said any surprises from the Fed could rock the equities market. "Obviously the market will look at every nook and cranny of what the Fed says tonight, but there are no great expectations of a change in rhetoric," he said. "That said, if they do say something different, it could have quite an impact," he added.