Euro-zone headlines dominate the weekend financial press after European
Central Bank chief economist Stark resigned on Friday in protest about
developments with the European Financial Stability Facility and the
ECB’s bond-buying programme, with the EUR tumbling to 7-month lows in
the aftermath. The market continued to be underwhelmed by U.S. President
Obama’s $450 bln jobs package and a very non-committal speech on QE3 by
Federal Reserve Chairman Bernanke with the week finishing in a definite
risk off mode, favouring the USD as the major safe haven with the CHF’s
previous role negated by SNB actions to peg its currency last week.
There was little on the data front to excite U.S. markets and so it was the gloomy sentiment from Europe that led direction. Wall St plummeted, with financials suffering among the heaviest following weakness in French banking shares on their Greek exposure (indeed a weekend Bloomberg report suggests they may be facing an imminent downgrade by Moody’s). US Treasuries surged amid safe-haven buying with 10-year yields dipping to just below 1.90% at one stage, a cycle low. The only data release saw U.S. wholesale inventories rising 0.8%, just above the 0.7% expected but was totally ignored.
Over the weekend, China released its trade data for August which showed a shrinking surplus to $17.76 bln from $31.48 bln although the main contributing factor was a surge in imports. Imports rose 30.2% y/y from 22.9% while exports failed to keep track with just a 24.5% annual increase, albeit faster growth than in July but the import improvement prevents the commodity-linked currencies, especially the AUD, from an absolute rout.
The weekend G7 meeting was again a damp squib from a market perspective with nothing new in the post-meeting statement apart from the customary assertion to “do all that is necessary to ensure the resilience of the banking systems and financial markets”. There was no particular statement on intervention though the G7 said “while it prefers markets to set currency values, disorderly and excessive movements can undermine stability”. As a result, new Japanese Finance Minister Jun Azumi ended his first G7 meeting without his counterparts objecting to his pledge to take “bold actions” to stem yen gains – think there’s a line in the sand somewhere lower than current levels.
We started the week with a number of holidays across Asia today (China, South Korea and Taiwan) and liquidity in the opening stages was an issue. EURUSD opened where NY left it, but slumped to a 1.3557 low on little volume before bouncing. The rest of the session was spent in a tidy 20-30 point range. On the data front, Australia published July’s trade balance which was broadly in line with expectations and still benefitting from buoyant demand in the commodity sector.
Both the European and U.S. sessions are devoid of data today so sentiment will likely be dictated by the hangover mood from last Friday with all eyes on any developments in the Eurozone and it would appear that further risk aversion trading will be the play of choice.
Economic Data Highlights
There was little on the data front to excite U.S. markets and so it was the gloomy sentiment from Europe that led direction. Wall St plummeted, with financials suffering among the heaviest following weakness in French banking shares on their Greek exposure (indeed a weekend Bloomberg report suggests they may be facing an imminent downgrade by Moody’s). US Treasuries surged amid safe-haven buying with 10-year yields dipping to just below 1.90% at one stage, a cycle low. The only data release saw U.S. wholesale inventories rising 0.8%, just above the 0.7% expected but was totally ignored.
Over the weekend, China released its trade data for August which showed a shrinking surplus to $17.76 bln from $31.48 bln although the main contributing factor was a surge in imports. Imports rose 30.2% y/y from 22.9% while exports failed to keep track with just a 24.5% annual increase, albeit faster growth than in July but the import improvement prevents the commodity-linked currencies, especially the AUD, from an absolute rout.
The weekend G7 meeting was again a damp squib from a market perspective with nothing new in the post-meeting statement apart from the customary assertion to “do all that is necessary to ensure the resilience of the banking systems and financial markets”. There was no particular statement on intervention though the G7 said “while it prefers markets to set currency values, disorderly and excessive movements can undermine stability”. As a result, new Japanese Finance Minister Jun Azumi ended his first G7 meeting without his counterparts objecting to his pledge to take “bold actions” to stem yen gains – think there’s a line in the sand somewhere lower than current levels.
We started the week with a number of holidays across Asia today (China, South Korea and Taiwan) and liquidity in the opening stages was an issue. EURUSD opened where NY left it, but slumped to a 1.3557 low on little volume before bouncing. The rest of the session was spent in a tidy 20-30 point range. On the data front, Australia published July’s trade balance which was broadly in line with expectations and still benefitting from buoyant demand in the commodity sector.
Both the European and U.S. sessions are devoid of data today so sentiment will likely be dictated by the hangover mood from last Friday with all eyes on any developments in the Eurozone and it would appear that further risk aversion trading will be the play of choice.
Economic Data Highlights
- CA Aug. Unemployment Rate out at 7.3% vs. 7.2% expected and 7.2% prior
- US Jul. Wholesale Inventories out at 0.8% vs. 0.7% expected and 0.6% prior
- China Aug. Trade Balance out at +$17.76b vs. +$24.6b expected and +$31.48b prior
- China Aug. Exports out at +24.5% y/y vs. 21.9% expected and 20.4% prior
- China Aug. Imports out at +30.2% y/y vs. 21.0% expected and 22.9% prior
- JP Jul. Tertiary Industry Index out at -0.1% m/m vs. 0.2% expected and revised 1.8% prior
- JP Aug. Domestic Corporate Goods Prices out at -0.2% m/m, +2.6% y/y vs. -0.2%/+2.7% expected and 0.3%/2.9% prior resp.
- AU Jul. Trade Balance out at +A$1826 mln vs. +A$1900 mln expected and revised +A$1817 mln prior
Upcoming Economic Calendar Highlights
(All Times GMT)
(All Times GMT)
- EU ECB Announces Bond Purchases (1330)
- US Fed’s Fisher to speak (2000)
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