Fundamental Headlines • J.P. Morgan, Wells Take Profit Hits – Wall Street Journal • Deposits Flow to Healthier Banks – Wall Street Journal • US hedge fund withdrawals hit $43bn in September – Financial Times • EU Pushes for Overhaul of Postwar Financial System – Bloomberg • Switzerland Gives UBS a Bailout; Credit Suisse Raises Funds – Bloomberg • EURUSD – The European Central Bank announced that they will provide up to EUR 5B in lending to Hungary, while the German government lowered their 2009 growth forecasts to 0.2% from 1.2% in April. The economic downturn throughout Europe suggests that the ECB may have to increase their efforts to keep the economy from falling into a recession, and has certainly spurred expectations for further rate cuts to follow in the coming months. Furthermore, ECB voting member Guy Quaden expressed his concerns as he insisted that world is facing its biggest crisis since the Great Depression in the 1930’s, and went onto say that the central bank will work to stem ‘contagion effects’ emerging from the financial crisis. Discuss the topic and your trade ideas in the EUR/USD Forum. • USDCHF - Retail spending in Switzerland stalled in August as higher living costs pushed consumers to cutback on discretionary spending. The breakdown of the report showed that purchases of clothing and shoes plunged 7.4% while spending on personal goods slipped 4.7%, and was followed by a 3.0% decline in furniture sales. In addition, the ZEW investor confidence survey for Switzerland slipped to a record low reading of -91.1 from -44.4 in September, indicating that the spillover effects of the financial crisis paired with fading growth prospects are certainly taking a toll on investors. Meanwhile, the Swiss Nation Bank announced that they will setup a Special Purpose Vehicle (SPV) to loan up to $54B to purchase illiquid assets from UBS. The central bank went onto say that new initiative is essential step to support the Swiss financial system, and also extended the offer to Credit Suisse. For more news and resources, visit the new Swiss franc Currency Room.
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