Gerry will be here in a short while; hopefully Europe will bring some enthusiasm to the next session….

Tread boldly and trade well

• Australian Coalition clouds it’s chances in the election race with a A$ 7-9bn financing ‘black-hole’
• The German Bundesbank trying to oust controversial board member
• Australian July Trade Balance A$ 1.888bn seasonally adjusted – not up to expectation but minor impact on the AUD
• Economy Avoids Recession Relapse as Data Can’t Get Much Worse

Much stronger ISM data from the US gave the Asian market a start on the positive side with risk-positive trading following a firm US equity market; the Asian bourses duly followed suit and early on the market looked to trade bouyantly. The only news of the session was the Australian Trade data which came in under expectation and a minor negative impact on the AUD. Prior to this news the risk trades had started to come back on profit taking and have stayed in the lower range of the session in a lacklustre market. There was no new news nor talk from Tokyo – a change from recent days ! and no flows of significance to report…..

Ranges EUR/USD 1.2785/1.2814 EUR/JPY 107.51/1.8.26 USD/JPY 84.07/57 CABLE 1.5429/63 USD/CHF 1.0150/87

AUD/USD 0.9054/0.9117 AUD/JPY 76.13/98

GOLD $1246.60 OIL $73.65 (Light Crude October)

Perhaps they are too busy to intervene

What an unusual phenomena !

Sean warned me my ‘watch’ would be quiet…..even the Wall Street Journal has resorted to the frivolous

The U.S. economy is so bad that the chance of avoiding a double dip back into recession may actually be pretty good, according to this Bloomberg article

expected A$ 3.11bn  last A$ 3.54bn

Imports +2%, Exports -4% MoM, both seas adj

Well not up to expectation but AUD only slipped 15 points and holding

AS Gerry reported overnight, some of the big Middle-Eastern players were very active buyers in EUR/GBP yesterday. The break above .8280 also encouraged some technical buyers to enter the market, both on a stop-loss basis and also initiating fresh longs.

A friend of mine who sees a lot of the bigger interbank flows and orders suggests to me that selling the rally may prove to be an excellent risk-reward trade. He suggests waiting until .8350/.8400 and if the market stalls there for a session or two, then sell with a reasonably tight stop looking for a test of .8000.

Despite the very heavy option-related selling below 1.3000 which took the market as low as 1.2850, EUR/CHF has bounced back very impressively. When a market bounces hard despite being in a strong downtrend and despite heavy selling still occuring, then we may be close to a bottom.

Another point to keep in mind is that the flat trendline support in USD/CHF comes in at 1.0020.

All music to the ears of a contrarian like myself but I’ve been burned a few times already so I will proceed with caution.

USD/JPY and USD/CHF are both slightly higher in very early Tokyo trade.

The heavy stops were all positioned above .9080 and AUD/USD rallied to a high of .9116 after they were triggerd in NY. Now we have fallen back to this level on the usual Asian market profit taking.

The other majors are trading quietly inside 15 pip ranges.

The German Bundesbank has unanimously expressed its wish to see controversial board member Thilo Sarrazin ousted from his position.

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