Morning Currency Wrap for Monday November 15, 2010

Ireland is Playing Hardball with the EU - The EU is desperate and Ireland knows it. The Irish government continues to deny it needs a bailout citing that its debt requirements are funded until mid-2011. Ireland and other EU countries are not amused that Germany  is trying to do an end run around EU policies by pushing the idea of asset value reductions or "haircuts" for private bondholders under a permanent euro zone rescue mechanism it wants in place from 2013. Will it looks like Ireland is playing hardball because it knows that the EU wants to avoid a a Greek-style scenario where budget problems in one country cause a contagion and plunges the entire euro zone into crisis. We will see how this plays out but for now the Euro is under pressure. In Asia, the USD as moved above 83 Yen for the first time in more than five weeks as rising bond yields and signs U.S. economic growth is gathering pace boosted demand for the USD. Japan's GDP grew at an annualized 3.9% in the Q3 but this news was not enough to bolster the Yen in this risk off environment. In the UK, the GBP has been able to hold its own despite news that Rightmove Plc, the operator of Britain’s biggest property website, said the average asking prices for homes in England and Wales fell 3.2% this month to 229,379 pounds ($371,000). That’s the biggest monthly drop since December 2007. In the U.S. today, data was mixed as advanced retail sales for October came in at 1.2% over the expected increase of 0.7% while the Empire Manufacturing Survey came in at -11.1, which comes in sharp contrast to the 11.7 that had been expected. This was a steep reversal for the EMS from the 15.7 registered for the prior month, but this survey is usually very volatile so the market has shrugged it off. In Canada, the CAD followed the USD higher as signs that U.S. economic growth is gathering strength is a positive for the CAD. News that BHP Billiton had officially scrapped its $39 billion bid for Canadian fertilizer giant Potash Corp. after Ottawa had blocked the proposed takeover a couple of weeks ago had little impact on the CAD.