- For the second day in a row it was a sharp move higher in the NZD/USD which initiated a round of USD selling
- New Zealand Q2 GDP +0.1% against expectations of -0.2%
- Federal Reserve laying the groundwork for an exit strategy
- G20 support grows for reshaping world economy
- Gold, oil and regional stockmarkets all flat on the session
Tokyo was once again on holiday but that did not stop the NZD leading another early morning charge. The NZD/USD went from .7180 to .7308, a gain of 1.5%, in a little over an hour after the release of the GDP numbers which showed the small economy coming out of recession. This in turn boosted the other USD pairings; AUD/USD triggered stops above the previous high at .8775 before running into presumed option-related selling ahead of .8800.
EUR/USD also caught a tailwind driven by fresh CTA buying as the overnight 1.4821 high was breached. The pair traded to a high of 1.4840 before falling back again below 1.48 as the speculative buyers sold out again. There is market talk of big bids at 1.4600-25 and significant offers at 1.4910-25.
USD/CHF stops below 1.0200 were also targeted and successfully tripped. EUR/CHF fell to a low of 1.5115 but I have had no confirmation of any SNB buying at that level.
Cable ran into a decent sized sell order at 1.6400 in the morning and was unable to get above the level, falling back to 1.6350 before recouping the ground late in the session.
USD/JPY ran into some good sized bids at 90.50 and bounced sharply back above 91.00 before settling back mid-range.
The Medley report last week suggested that the Federal Reserve is about ready to stop its QE program and such an action became increasingly likely with fresh reports that the Fed is in talks with primary dealers (see Jamies report). This should deter traders from getting overly bearish USD pre-FOMC.
Markets: Shanghai and HK bourses were flat. Gold +$1.5 at $1017/Oz. Oil flat at $71/bbl.
Ranges: EUR/USD 1.4786/1.4840, Cable 1.6352/1.6408, USD/JPY 90.51/91.20, USD/CHF 1.0188/1.0244, AUD/USD .8734/87.
