Forex headlines for Sept 3, 2013:
- August US ISM manufacturing PMI 55.7 vs 54.0 exp
- ISM new orders highest since April 2011
- July US construction spending 0.6% vs 0.3% exp m/m
- Kerry says Obama not looking for war in Syria, will deter and degrade chemical weapons capability
- August Canadian RBC manufacturing PMI 52.1 vs 52.0 prior
- OECD European growth forecasts raised, US and China lowered
- August US final Markit manufacturing PMI 53.1 vs 54.0 exp
- Japan’s Abe to announce tax decision on Oct 2
- Gold up $21 to $1412
- S&P 500 gains 0.4% to 1639
- AUD leads, JPY lags
The ISM numbers were the best since mid-2011 and the initial reaction was to buy the dollar.
The problem was that EUR/USD quickly ran into support at the 200-day moving average and USD/JPY fizzled ahead of 100. Those major technical lines erased any chance of a follow through.
From there, wilting sentiment in the stock market took over. The S&P 500 was up 18 points at the open but backed off to just +3 midway through the day. That pulled USD/JPY as low as 99.25.
Flow-driven trading was a factor midway through the day with EUR/USD and cable hitting the daily lows at the London close. Cable bounced to 1.5566 from 1.5521 and EUR/USD to 1.3175 from 1.3139.
The commodity bloc was generally buoyant but nothing substantial despite a solid gain in oil. Chatter from the Russians about missiles in the Mediterranean sparked a quick jump. It proved false but oil remained bid as traders got a reminder of the headline risks of being short.
