- US Q2 GDP revised to 1.0% annual rate from 1.3% previously
- University of Michigan consumer sentiment index slides 55.7 from 63.7 in July
- Bernankedoes not make the case for immediate further monetary stimulus; Fed has tools and will explore more tools at September FOMC meeting
- UBS warns clients it may charge excess balance fees on CHF denominated clearing accounts
- S&P 500 rises 1.5% to 1176
- US 10-year note yield falls 5 bp to 2.18%
- Gold rises $38 to $1812
Another bipolar session session for the dollar. It immediately rallied in the wake of Bernanke’s Jackson Hole speech hitting the wires as there was no immediate call for fresh QE. EUR/USD slid as far as the 1.4328 level before bouncing from that level again (we traded there briefly on Thursday, too). Reports of Asian central bank buy subsequently made the rounds, as always. WE rallied as far as 1.4502 on renewed risk appetite as the market came to the conclusion that Bernanke left the door to QE sufficiently a jar to warrant some buying of stocks and commodities.
USD/CHF was the standout performer today. Reports from earlier in the day that the SNB had implored banks to institute an excess balance fee on Swiss deposits (though foolishly denied by the central bank) , sent the CHF weaker in London and the pace of selling exploded after Bernanke was out of the way. USD/CHF shot through the 0.8010/20 resistance and lurched as high as 0.8159 before stalling. EUR/CHF exploded as well, rising to 1.1735 from 1.1420 in NY.
With CHF losing its safe-haven status, JPY was the new go-to currency for fraidy cats. USD/JPY lost much of its recent gains, falling back to 76.50 in NY ahead of Bernanke (There was a flurry of QE3 hope just before the speech). It ends the day at 76.70.
AUD/USD performed strongly as gold rebounded with equities and risk-averse AUD/CHF shorts were covered willy-nilly. AUD/USD rallied as high as 1.0591 at midday in NY. It ends the week at 1.0565.
