Daily Report: Dollar Higher on Risk Aversion, ECB and G20 Featured

Dollar regains some strength today as Asian equities are broadly lower with their focus returning to the Greece situation. It's now clear that all European leaders are seeing Greece's referendum as a vote on staying or leaving Euro. The referendum will likely take place on December 4 or 5 and Greece will not recent a "single cent" of bailout fund before the having the result. Athens will run out of money by mid-November. But Greek PM Papandreou clarified that Greece is able to stay afloat after the the referendum. And as Papandreous said, "it's quite a few days before the 6th tranche is needed to pay up salaries and pensions and so on". Facing the possibility of Greece's leaving Eurozone, default, and contagion to other countries, German Merkel pledged to have "clarity more quickly" to safeguard the euro regardless of the outcome of the referendum. Merkel and Sarkozy will meet with EU's Monetary Affairs Commissioner Rehn today on the plan to boost the firepower of the EFSF to EUR 1T.

As expected the Fed left the policy rate unchanged at 0-0.25% and made no change in the stimulus. While providing a more positive tone on economic growth and household spending, the latest staff projections on economic growth were downwardly revised from those estimated in June. Policymakers reiterated commitments to improve communication and Chairman Ben Bernanke appeared to favor more on tying the level of the Fed funds rate to unemployment and inflation levels thresholds or disclosing FOMC members' interest rate forecasts. Concerning additional stimulus, Bernanke considered large-scale purchases of agency MBS as a 'viable option'. More in Fed Lowers Growth Forecasts, Considers MBS Purchases.

The National Institute for Economic and Social Research said that the UK economy faces "significant downside risks" and there is a 50% chance UK will slip back into recession. NIESR noted that “recent poor performance has been driven by weak domestic demand, rather than developments in the euro area, but going forward these too will reduce economic growth." And, "the baseline forecast assumes a successful resolution of the euro area crisis; there are therefore significant downside risks." It also noted that the new stimulus "will not address the fundamental drag on business investment".

Market's focus will now turn to G20 and ECB meeting today. While much has been anticipated for the G20 summit just a week ago, it's now unlikely that there would be anything concrete after the Greek drama in the past few days. Just as Chinese Vice Finance Minister Zhu said that is' now "too soon" for China to contribute to Eurozone's bailout. There has been some speculation that ECB would cut rates in today's meeting but more likely, the new President Mario Draghi would stand pat.

On the data front, New Zealand unemployment rate unexpectedly rose to 6.6% while employment growth missed expected at 0.2% qoq only. Australian retail sales rose 0.4% mom in September. UK PMI services will be a main focus in early European session, followed by ECB meeting. From US, non-farm productivity, jobless claims and ISM services will be featured.