• Economic crisis not yet over, unemployment will continue to rise. Expects G20 leaders to continue to support idea of keeping stimulus in place – IMF’s Strauss-Kahn
  • China launches anti-dumping and anti-subsidies investigation into automotive and chicken exports from the US. (But it’s not retaliation for the tire dispute)
  • US has failed to fix underlying problems of its banking system. Problems worse that they were in 2007 before the crisis -Nobel prize-winning economist Joseph Stiglitz
  • Shanghai share index closes up 1.3%, one-month closing high
  • Swiss producer/import prices for August +0.1% m/m, -5.5% y/y, exactly in line with median forecasts
  • Moody’s outlook for UK banks remains negative
  • Watching currency moves closely, won’t comment on specific levels – MOF’s Tango
  • Euro zone Q-2 employment -0.5% q/q, -1.8% y/y – Eurostat
  • Euro zone July industrial production -0.3%, -15.9% y/y, vs median forecasts -0.3%, -16.7% respectively
  • EU economy appears to be at turning point – European Commission

Risk sentiment is a little wobbly at the start of the week. Growing trade tensions between the US and China and negative comments from economist Stiglitz regarding the US banking sector among things weighing a little.

Japanese stocks got hit extra hard overnight on growing concerns the strength of the JPY will negatively impact Japanese exporters.

EUR/USD sits at 1.4545, effectively unchanged on the day. We’ve traded in a relatively narrow range. Early weakness in the pairing bottomed at 1.4517, with sources touting buy orders lined up at 1.4520 down through 1.4500. Sell stops then said to be lying just south of 1.4500.

As is normal, GBP/USD and sterling in general have suffered with risk appetite on the wane. Cable is down at 1.6535 from an early 1.6615 having been as low as 1.6522. Stops were triggered on breaches of 1.6600 and then again when 1.6550 gave out. Negative comments from Moody’s re UK banks haven’t helped matters.

EUR/GBP is up at .8792 from an early .8750, with one particular UK clearer seen with an ongoing buy interest.

USD/JPY is up a little, presently at 90.80 from an early 90.45. We’ve had some official verbal intervention (see above), which isn’t at all surprising given the close proximity of the psychological 90..00 level.

It was interesting to listen to Jim O’Neil from Goldmans being interviewed by Bloomberg. Mr O’Neil opined that the burgeoning JPY appreciation doesn’t make sense to him, labelling it “ridiculous.” Suffice to say he doesn’t think it will last.

EUR/CHF continues to look soft and has tested significant technical support down at 1.5110 (session low 1.5111) This is the level at which the SNB has intervened aggressively in the past. We’re presently up at 1.5125.