- ISM index falls to 50.9 in July from 55.3 in June
- Nikkei reports Japan preparing for forex intervention
- US open to Japan intervention: Nikkei
- Italian bank shares slide, spreads widen to 355 bp versus bunds
- European debt woes a potential major drag on UK: IMF
- House to vote on debt bill tonight; Senate tonight or tomorrow
- US 10-year note yield slides 4 bp to 3.75%
- S&P 500 falls 0.4% to 1287
- Gold falls $8 to 1619.50; oil falls 0.5% to $95.21
A very volatile session market by a risk-off slide in equities and commodities which began before the ISM report hit the tape and accelerated after the data disappointed the market greatly. EUR/CHF and EUR/JPY sales sent EUR/USD down to US opening levels around 1.4440 to 1.4340 before the number and slumped all the way to 1.4185 late in the European session. In addition to poor US data, heavy selling of Italian shares and widening spreads of Italian debt over bunds prompted liquidation of EUR/USD and the crosses.
USD/CHF and EUR/CHF made fresh record lows in the midst of this morning’s chaos at 0.7730 and 1.1030, respectively. Jitters eased slightly in the after sending USD/CHF to 0.7835 and EUR/CHF to 1.1168 at the close.
USD/JPY retested the post-earthquake lows today, dropping to 76.29. It immediately snapped back to 77.10, prompting talk of intervention. The talk proved unfounded and prices fell to 76.40 before bouncing again later in the session. We had recovered to around the 76.90 area when word hit the wires that the Nikkei had published a story saying the MOF was preparing to intervene with the okay of the US government. 77.28 was the high after that report.
AUD/USD saw a massive wave of profit-taking during the US morning, slumping as low as 1.0924 from 1.1065 early in the US session. We end at 1.0965. No change from the RBA is expected tonight.
