FX Flat

• The dollar was little changed against most major currencies on Tuesday. Trading volume was thin due to no major US economic data today and US and Japanese holidays on Thursday. Sterling rose to a one-week high against the euro and the dollar after a key survey showed November’s UK manufacturing orders were much better than expected. The yen traded near a record low against the euro, as minutes of the Bank of Japan's policy meeting in October fueled speculation the BOJ may delay raising interest rates until next year.

Financial and Economic News and Comments

US & Canada
• Federal Reserve Governor Kevin Warsh said inflation is still too high and there are clear risks it will not slow as investors expect. “Inflation, though down somewhat from its level earlier this year, remains uncomfortably elevated. …Financial market prices imply that inflation will continue its gradual but persistent downward track during the forecast period. There remain, I believe, clear upside risks to that inflation outlook,” Warsh said in prepared remarks at the New York Stock Exchange.

• Canada’s retail sales fell a more-than-expected 1.2% in September, the largest drop in a year, Statistics Canada reported. Sales fell to C$32.9b ($28.7b).

• Canada’s leading index of economic activity rose 0.2% in October, Statistics Canada reported.

Europe
• More flexible exchange rates are in the interests of everyone, including China, European Central Bank President Jean-Claude Trichet said at a press conference Tuesday following his meeting with East Asian and Pacific (EMEAP) central bank officials. Trichet also warned of a waning disinflationary impact from the region.

• November’s UK manufacturers export orders balance reached its highest since 1995 with a 3% rise, the Confederation of British Industry said in its monthly industrial trends survey.

• French Q3 GDP was unchanged from Q2, statistics office Insee reported. The pause in French Q3 GDP growth was due to the ongoing trade deficit and especially to a slowdown in inventory gains. Consumption rose a fairly strong 0.6%.

Asia-Pacific
• The Japanese economy will remain on a “moderate” expansion track and the BOJ will conduct “careful” monetary policy, the minutes of the BOJ October policy board meeting showed.