- August Philly Fed -7.1 vs -5.0 exp
- Initial jobless claims 366K vs 365K exp
- Housing starts -1.1% vs -0.5% exp
- Building permits hit 4-year high
- Merkel: German on board with ECB conditionality
- ECB’s Nowotny: no fiscal integration for 3-4 years
- BOE’s Weale: it’s not a recession, it’s a period of stagnation
- Thinktank report: ECB will embark on large-scale bond purchases after Spain EFSF request
- Spanish 10-year yields hit one-month low, down 12 bps to 6.52%
- Oil touches highest since May
- White House ‘dusts off’ oil SPR release plan
- WSJ: Plosser acknowledges fight against QE3 might be a losing battle
- EUR leads, JPY lags
- S&P 500 touches 4-month high at 1417, up 0.7% on day
The soft data undermined the US dollar while comments from Merkel and growing speculation that Europe will unveil a package of crisis measures after an EFSF request from Spain, helped to boost the euro.
EUR/USD marched by nearly a full cent to 1.2374. Offers are lined up from there to much higher with some stops at 1.2380 mixed in.
Strong UK retail sales continued to underpin cable. Buy stops gave out above 1.5712 but it was unable to mount a serious push for 1.5750.
The Treasury market was choppy and that spilled over to USD/JPY, which chopped between 79.10/40. The US dollar hit the highs of the day just before the jobless claims and housing starts figures.
The commodity bloc was strong as AUD/USD pressed above 1.05 and USD/CAD fell to a three-month low. USD/CAD buyers lined up to 0.9800 and beyond while ACB’s and others on the offer around 0.9900.
