Honohan, Not Hawaiian But Irish - Irish central-bank Governor Patrick Honohan is the first Irish official to publicly say that the nation will need aid. Irish citizens and business has been removing deposit from Irish banks over the last couple months which has added to the banks wows. Let's face it, the Irish didn't hide their heads in the sand when trouble started like the Greeks. They didn't cry and they didn't ask for a bailout, they took their medicine and dealt with the problems. What is killing the Irish is their banks, which are bigger than the whole Irish economy. Back to the markets, the Euro was up versus the USD on anticipation of a bailout for Irish banks in the next couple of days. The theory is that this bailout will stop the contagion from spreading to the rest of Europe - don't believe it, this is a classic buy the rumour and sell the fact situation. You will hear today that Spain had a successful bond auction today, but my guess is that the buyer was the ECB in a covert attempt at QE. Problem solved, so the risk trade is back on today causing the USD to drop across the board. Meanwhile, Federal Reserve Chairman Ben S. Bernanke and other Fed officials went on the offensive yesterday to defend the Fed's expansion of its record monetary stimulus. Yesterday's CPI data in the U.S. helped them justify the latest version of QE as inflation was the smallest increase since records started in 1957. Yes, inflation is down but everything I buy comes in a smaller package, give me a break. In Asia, the AUD and NZD were both up as the risk on trade spurred commodity prices higher, while the Yen stayed in a tight range against the USD. In Canada, the CAD strengthened to a 2-day high against the US as crude oil rose above $81 a barrel today and other commodities moved higher as the risk trade was back on due to eased concerns over Ireland's debt crisis. The CAD extended its gains after Canadian leading indicators rose 0.2% in October led by stock market gains, following a revised 0.2% September decline.
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