Beige Book, FR Industrial Production And Gold

The International Monetary Fund slashed its growth forecast for the UK this year and warned that government policies are failing to restore confidence. The IMF revised its GDP projection for 2012 downward from 3.9 percent to 3.3 percent, as it expects the economy to shrink by 0.4 percent this year.

There was also an unexpected slide in EUR/USD yesterday, with the pair falling 100 pips in a matter of minutes with no clear catalyst – and for once it wasn’t Mario Draghi. One possible explanation is an error on the yield for 10-year Spanish bond quoted by Bloomberg, and reported by the Wall Street Journal. It appears that the 10-year benchmark had accidentally changed from 5.85 percent Jan 2022 to the 4.8 percent January 2024.

I expect today to be slow with not much economic data releases to report on. France is due to release its latest figure for industrial production, followed by the latest edition of the Fed’s Beige Book. There is also some volitility in gold to look out for.

Beige Book (06:00 GMT) The first thing I will be looking at when the Federal Reserve’s Beige Book comes out today is the unemployment reports. The jobless number for September, released to great excitement last Friday, showed a decline from 8.1 percent to 7.8 percent in September after revisions to the employment data and a rise in the household survey. Last time round the 12 Federal Reserve districts said there was “little movement” in unemployment, but I will be expecting reports of significant hiring to confirm that September's figures were more than a blip.

France Industrial Production (06:45 GMT) Industrial output in France is forecast to remain flat during August after rising 0.2 percent in July. France’s economy is expected to grow by just 0.1 percent in 2012 and 0.4 percent in 2013, according to the IMF’s latest forecasts. Weak external demand from neighbouring countries like Italy and a lack of competitiveness from firms like car-maker Peugeot and telecommunications giant Alcatel Lucent have led to a decline in industrial output in recent months. Moreover, recent austerity measures announced by the Hollande government, which has been well documented by my TradingFloor.com colleague Steen Jakobsen, will only help to push the economy into a deeper slump.

Gold (All day) The third number to watch today is gold. Traditional gold investors will hoping for a rebound after the precious metal declined sharply yesterday, falling some USD 10 to 1,763.5. Gold has moved almost USD 200 higher in the last 3 months, and while some may be expecting a further rally with additional QE from the Fed on the cards, the precious metal is losing steam. There has been a very strong correlation between gold and EUR/USD in the last seven days, so keep an eye out for that pair.