Good Morning,

– The euro trade below to $1.27 level early on Friday, after reached a 2-1/2 week high of $1.2791 yesterday, prior to getting knocked down by the disappoint  German data.

– Asian shares drooped and oil prices fell to two-year lows. Japan’s Nikkei -1.15%, Hong Kong’s Hang Seng -1.77% (07:05 GMT), Korea’s Kospi -1.24%, Australia’s ASX 200 -2.03% and China’s Shanghai -0.65%.

–  Weak German export data raised fears that a recession at the heart of Europe could slow down the global economy. Exports from the engine of the EU economy fell 5.8 percent in August, the worst decline since January 2009, data showed on Thursday.

– The dollar’s index edged down to 85.48. On Thursday hit a low at 84.93, its lowest level since late September, moving away from a four-year high of 86.746 hit one week ago.

– FED’s officials insist that the outlook for interest rates depends on how economic data evolves and is not driven by the calendar. They are nevertheless offering various views on the probable timing of the first increase since 2006. The Fed’s pledge that interest rates will stay low for a “considerable time” could mean anything from two months to one year, Vice Chairman Stanley Fischer said. New York Fed President William C. Dudley said this week that forecasts for an increase in mid-2015 are “reasonable.” Today, San Francisco Fed President John Williams said that timeframe is a “reasonable guess to my mind.”

– FED’s Bullard, who sees the rate going up at the end of the first quarter of next year, said investors have it wrong. “In my mind the markets are making a mistake,” he told reporters.

– SocGen on EUR/USD: The dollar has rallied too far, too fast since July on the back of good data and a small change in the FOMC language but as long dollar positions became excessive, this week’s FOMC minutes were a catalyst for a clear-out. “Maybe the dovish nature of the minutes is a reminder that we have not yet moved to a ‘strong dollar’ phase, just a correction from excessive under-valuation, and downside pressure will continue to increase on high yielders, commodity currencies and the euro,” SocGen argues. SocGen notes that the European outlook has taken a turn for the worse with recent data confirming that the Ukraine crisis and sanctions on Russia are hurting growth in Germany. “It’s time for the FX market to stop looking for a stronger dollar, and focus on the risk of further euro weakness instead,”SocGen advises.

– Nowotny says yesterday:  ECB not yet ready for QE, needs discussion, thought. Doesn’t see need for QE in Europe yet. Doesn’t rule out QE ‘eventually’. Must judge if current efforts are working before QE talk.

– BOJ’s Kuroda: Will tell G20 Japan making steady progress toward 2% inflation target. Says won’t comment about FX levels. Says forex may be discussed at G20, will not be major topic. No change to view global economy to gradually accelerate toward next year. IMF’s downgrade to Japan GDP estimates due to larger effect of sales tax hike.

– Japanese consumer confidence worsened for a second straight month in September, a Cabinet Office survey showed on Friday, suggesting the damage inflicted by the sales tax hike in April is lasting longer than expected. The survey’s sentiment index for general households, which includes views on incomes and jobs, was at 39.9 in September, down from 41.2 in August. The Cabinet Office downgraded its view on the consumer confidence index, saying it is stalling.

– RBA’s Assistant Governor Malcolm Edey: Seeing some concentration of risk-taking in economy. Risk-taking concentration particularly in housing. Housing finance is becoming an increasing concern to the RBA and it does seem like they are on track to have implemented some form of macro-prudential policies toward the end of 2014. The AUD is edging a little higher, seemingly in response to these comments.

– Watch today: IMF, World Bank, UK trade.