It was a relatively calm session overnight with most currency pairs
range-bound with a mild tendency to unwind pre-weekend safe haven
trades. Gold was the star performer with an eventual push through 1,900
which lent additional support to the AUD. Strong currencies like the CHF
and JPY only showed muted reaction to further warnings from the
respective authorities, with USDJPY particularly tight-ranged.
On the US data front, the Chicago Fed Activity Index was soft, but not as soft as feared with a -0.06 print from -0.38 last time, while mortgage delinquencies showed a slight increase to 8.44 percent in the second quarter from 8.32%. Wall St edged a touch higher though the financial sector was a notable drag with bank CDS prices pushing higher in late trading. The DJIA closed +0.34 percent, S&P +0.03 percent and the Nasdaq +0.15 percent.
Today’s Asian session was another quiet affair with gold again a stand-out performer. We pushed to new highs just short of 1,912 before news emerged that the Shanghai Gold Exchange would be lifting margins on three of its gold forward contracts to 12 percent from 11 percent effective August 26 and would widen the daily trading limits for those contracts to 9 percent from 7 percent previously. Traders marked gold lower on the back of this over concerns a similar move might come from the CME (recall last time CME margins were raised we saw a hefty correction in both gold and silver).
Other than the gold news, all else was quiet. Equity markets were in a better mood today with a healthy start in the black but momentum slowed by mid-morning. In an interview with Nikkei news, St. Louis Fed President Bullard (non-voter) commented that if the US economy weakens substantially and especially if the inflation picture starts to deteriorate so that deflation becomes a risk then the committee would likely take further action, and he would “at least” support the action if the above-mentioned conditions occurred.
Flash China manufacturing PMI offers some encouragement
On the data front, China’s HSBC flash manufacturing PMI for August showed some improvement from July, rising to 49.8 from an upwardly-revised 49.3 but note it is still below the 50 threshold between expansion/contraction. Still, any news is good news and we had a small pop higher in the risk currencies. Later RBA’s Battellino commented that it was still unclear how recent market turmoil would impact economic activity both at home and abroad, also admitting that the environment for monetary policy had been challenging in the past year and the divide between the mining and non-mining sectors had widened.
A busy European session kicks off today with Swiss trade data, PMI data from Germany and the Euro-zone and Norway’s Q2 GDP numbers. We also see the ZEW surveys for Germany and the Euro-zone along with UK BBA housing loans and CBI trends. The North American session features Canada’s retail sales, US new home sales, Richmond Fed manufacturing index and a late release of Euro-zone consumer confidence. Bank of England’s Weale and former Fed chair Greenspan are both scheduled to speak.
Economic Data Highlights
On the US data front, the Chicago Fed Activity Index was soft, but not as soft as feared with a -0.06 print from -0.38 last time, while mortgage delinquencies showed a slight increase to 8.44 percent in the second quarter from 8.32%. Wall St edged a touch higher though the financial sector was a notable drag with bank CDS prices pushing higher in late trading. The DJIA closed +0.34 percent, S&P +0.03 percent and the Nasdaq +0.15 percent.
Today’s Asian session was another quiet affair with gold again a stand-out performer. We pushed to new highs just short of 1,912 before news emerged that the Shanghai Gold Exchange would be lifting margins on three of its gold forward contracts to 12 percent from 11 percent effective August 26 and would widen the daily trading limits for those contracts to 9 percent from 7 percent previously. Traders marked gold lower on the back of this over concerns a similar move might come from the CME (recall last time CME margins were raised we saw a hefty correction in both gold and silver).
Other than the gold news, all else was quiet. Equity markets were in a better mood today with a healthy start in the black but momentum slowed by mid-morning. In an interview with Nikkei news, St. Louis Fed President Bullard (non-voter) commented that if the US economy weakens substantially and especially if the inflation picture starts to deteriorate so that deflation becomes a risk then the committee would likely take further action, and he would “at least” support the action if the above-mentioned conditions occurred.
Flash China manufacturing PMI offers some encouragement
On the data front, China’s HSBC flash manufacturing PMI for August showed some improvement from July, rising to 49.8 from an upwardly-revised 49.3 but note it is still below the 50 threshold between expansion/contraction. Still, any news is good news and we had a small pop higher in the risk currencies. Later RBA’s Battellino commented that it was still unclear how recent market turmoil would impact economic activity both at home and abroad, also admitting that the environment for monetary policy had been challenging in the past year and the divide between the mining and non-mining sectors had widened.
A busy European session kicks off today with Swiss trade data, PMI data from Germany and the Euro-zone and Norway’s Q2 GDP numbers. We also see the ZEW surveys for Germany and the Euro-zone along with UK BBA housing loans and CBI trends. The North American session features Canada’s retail sales, US new home sales, Richmond Fed manufacturing index and a late release of Euro-zone consumer confidence. Bank of England’s Weale and former Fed chair Greenspan are both scheduled to speak.
Economic Data Highlights
- US Jul. Chicago Fed Activity Index out at -0.06 vs. -0.48 expected and revised -0.38
- US Q2 Mortgage Delinquencies out at 8.44% vs. 8.32% prior
- US Q2 Mortgage Foreclosures out at 4.43% vs. 4.52% prior
- China Aug. HSBC Flash Manufacturing PMI out at 49.8 vs. 49.3 prior
- NZ Q3 2-Year Inflation Expectation out at 2.9% vs. 3.0% prior
- SI Jul. CPI out at +5.4% y/y vs. 5.0% expected and 5.2% prior
Upcoming Economic Calendar Highlights
(All Times GMT)
(All Times GMT)
- JP Machine Tool Orders (0600)
- Swiss Trade data (0600)
- GE PMI Manufacturing/Services (0730)
- EU PMI Manufacturing/Services (0800)
- UK BBA Loans for House Purchase (0830)
- GE ZEW Surveys (0900)
- EU ZEW Survey (0900)
- UK CBI Trends Surveys (1000)
- CA Retail Sales (1230)
- US Former Fed Chair Greenspan to speak (1245)
- UK BOE’s Weale to speak (1400)
- EU Euro-zone Consumer Confidence (1400)
- US New Home Sales (1400)
- US Richmond Fed Manufacturing Index (1400)
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