The dollar index hit a nine month low as anticipation of a second round of quantitative easing from the Fed weighs on the currency. Disappointing economic data will lead to further selling as the market is under the belief that the Fed will act to stimulate a stagnant economy.
Tomorrow Fed Chairman Ben Bernanke will testify in front of Congress on financial regulation. While monetary policy is not on the agenda, there will likely be some questions from the panel on the current and planned Fed moves that will have an impact on the dollar.
Today we have $29B of 7 year notes being auctioned, which were trading at all time lows at the open this morning. Treasuries has slipped a bit since then, with the 10 year currently off 7/32s.
Today there will be a vote in the House on the Fair Trade Act which basically will designate China as a currency manipulator. The next step is for the bill to be sent to the Senate. It is not expected to pass in the Senate, at least before the November 2 elections and the November G-20 meeting (Korea Nov 11-12). The general feeling is that the House vote will be a bluff by the administration in order to step up pressure on the Chinese to allow the yuan to appreciate. The yuan is trading at 6.6865 against the buck right now.
Austin mortgage rates were off a 6/32s this morning and have followed the treasuries slide and are now off 9/32. We will be watching the results of the auction at 12PM CDT closely.