- Canadian GDP slows to 2.0% in Q2; Q1 revised down to 5.8%
- ISM NY index falls to 55.6 in August from 59.4 in July
- Case Shiller home price index rises 4.2% in June y/y; strength seen fleeting
- Chicago PMI slips to 56.7 in August from62.3 in July
- MNI: ECB seen delaying exit strategy, continue providing unlimited liquidity to EU banks; worries about US economy, EU periphery cause delay
- FOMC minutes: Deflation risk small but inflation, employment levels lower than desirable for longer than expected
- S&P 500 closes nearly unchanged at 1049; holds support at 1040 again
- US bond yields close 6 bp lower at at 2.47%
- EUR/CHF closes at record 1.2870 after touching 1.2850 intraday
Month-end markets tend to be quite challenging, to put it politely, and today was no exception. Wide, unpredictable rages were the rule, not the exception today.
EUR/USD swung in a 1.2661/1.2744 range in New York. The fixing had less of an impact on the market than earlier feared, occurring about the middle of the days range near 1.2710. EUR cross selling was the main them, especially after Market News International printed story saying that ECB sources anticipate a delay in the exit strategy through the end of 2010, at least.
Risk aversion played a role as well as EUR/CHF plummeted to 1.2850 on panic buying of Swiss from players who had previously bought dips in EUR/CHF. USD/CHF held important support at 1.0130, however.
USD/JPY rose early in the session, threatening stop-loss buy orders at the 84.70 level. Reports of buying by a handful of central banks ahead of 84.00 barriers helped sooth the nerves of dollar bulls. Selling of USD/JPY and EUR/JPY and GBP/JPY at month-end helped knock USD/JPY lower in the afternoon, down as far as 83.83. Japanese accounts were among the late-day sellers pushing the pair to its lows. EUR/JPY fell as low as 106.25 during the afternoon after a morning rally as high as 107.78.
GBP/USD was sold heavily for month-end purposes while EUR/GBP saw the traditional month-end demand.
USD/CAD rallied on weak Canadian GDP which helped raise doubts of a BOC rate hike on September 8. One and done (one more 25 bp hike to 1%) at that meeting before a long pause is now the consensus call. USD/CAD reached 1.0672 before easing but Asian central bank buying at 1.0630 stemmed the pullback. Central bank sellers are now rumored at 1.0700.
AUD/USD was out of the spotlight today with a large fixing radar in AUD rumored overnight either flying under the radar or not materializing. 88.60/0.8920 was the New York range. We end at 0.8905.