- China’s PMI continues to show economic expansion
- Regional stockmarkets moderately higher
- Japan’s wage earnings show biggest yearly fall on record
- Australian job ads -1.7% in July
- HK PMI improves but economy still flat
- Taiwan’s CPI shows biggest fall in 40 years
- Greenspan and Geithner talk up the US economy
It was a quiet Monday morning start with a bank holiday in Australia preceding holidays in many European centres. The first move in the majors was higher after a GBP/JPY flow encouraged some dealers to go after stops in the cable above 1.6750 and stops in the EUR/USD above 1.4300. The EUR leg was particularly hard fought with a Sovereign name selling in some size. The stops above 1.43 were eventually triggered but the subsequent fall was very swift, back towards 1.4230. The pair hasn’t really managed a decent rally since and the feeling is that the market is caught a little long still.
The AUD/USD managed to break above its big 61.8% retracement level (.985/.601) at .8374 but couldn’t manage to trigger stops above .8400. Once again sovereign selling is suspected around the figure.
USD/JPY was quiet, moving around with some cross flows. Buyers are seen between 94.25/50 and stops are noted below 94.00.
Economic data out of Japan and Taiwan showed that deflation is the main potential problem facing Asian economies. Chinese PMI showed that their economy continues to grow for the 5th straight month and the HK PMI data showed an economy at a standstill, after 12 months contraction.
Tim Geithner and Alan Greenspan were joined later in the day by Nouriel Roubini with upbeat comments on the US and global economies. Regional bourses gained on average around 0.75% and gold continued to gain on the weak USD. September US crude traded above $70/bbl again and Brent is at $72.40.
Ranges: EUR/USD 1.4231/1.4308, cable 1.6700/76; USD/JPY 94.63/85; AUD/USD .8341/93 and EUR/JPY 134.95/135.43
Markets: Shanghai +1.1%, HK +0.6%, Nikkei +0.1%. Gold $955/oz.
