- US weekly jobless claims fall 27,000 to 451,000; nine states, including California did not report because of holiday so subject to heavy revision
- US trade deficit narrows to $42.8 bln in July from $49.7 bln in June
- German FinMin: 3% growth possible this year; borrowing may fall below EUR 60 bln
- Canada’s Flaherty: Concerned by export weakness
- Deutsche Bank to raise EUR 9 bln in capital due to Basel III
- Trichet: Will continue phased withdrawal of non-standard measures; too much pessimism over US economy–FT interview
- Fed’s Bullard: Fed still has bullets; expects economy to pick up early next year
- S&P 500 rises 0.5% to 1104
- US 10-year note yields rise to trend high at 2.755%
A sharper than expected drop in weekly jobless claims and a much narrower US trade deficit helped prompt a risk-on move early in the US session. Upon closer examination, the jobless claims data did not pass the sniff test since 8 states, including California with 37 million inhabitants, did not report their data to Washington because of the Labor Day holiday. So the government just took a guess. Markets were not really impressed, and reduced their risk profiles accordingly.
EUR/USD also ran into very heavy sales from the Swiss National Bank in the 1.2750/65 window for a second day running. This prompted a dip which reached 1.2686 at its worst in the US afternoon. We close at 1.2707 with stocks closing around the middle of their range just above the recent 1104 resistance area.
USD/JPY could not get out of its own way today, failing to rally on the better risk appetite or on firmer US yields. 83.64/94 was the range. Stops are clustered above recent highs at 84.04 at the 84.05/10 level.
AUD was a strong performer early in the day, rising to 0.9276 before suffering a midday set back. It bounced from the old resistance area at 0.9225 and ends at 0.9240. USD/CAD fell to 1.0302 before bouncing a bit late in the day on short-covering to end at 1.0335.
Gold fell sharply today with higher interest rates and hopes that the US will avert a double-dip helping trigger profit-taking in the metal.
