- US durable goods orders much weaker than expected
- US new home sales fall 12% in July to record low level
- Obama holds conference call with economic advisers
- SNB’s Hidebrand: SNB will act if sees deflation risks; not there now
- Sarkozy wants to rein in FX volatility when France heads EU in early 2011
- US equities reverse early 1% losses, close 0.3% higher at 1055
- US 10-year note falls to lows of 1.42& after housing data; rebounds to close at 2.53%
Another day another set of horrendous US economic data….
The market was unable to sustain USD bearish momentum, however, prompting short-covering, particularly in USD/JPY. USD/JPY spiked as low 84.04 after the US housing data but ended that hour on its highs for the day up to that time, around 84.70. It later rallied as high as 84.83 as US equities shook off early weakness and rebound on short-covering as well. USD/JPY offers are seen in the 84.90 area while stops lie above 85.00.
Hedge fund buying was rumored in USD/JPY throughout the morning hours.
EUR/USD was a choppy mess today, trading on risk aversion one moment and falling US yields the next. 1.2608/80 was the US range, all in the first two hours of trade. The afternoon was very quiet with most dealing between 1.2650 and 70.
Commodity currencies recouped some lost ground as risk aversion died down as the day wore on. AUD/USD rallied from 0.8770 to end the day around 0.8832. USD/CAD slipped back from the 1.0665 level and looks like it may be trying to put in a double top on the hourly charts. A break of 1.0570 should be good for roughly a cent on the downside, according to the textbook.
Cable ends in the 1.5450s after central bank buying around 1.5400 early in the day helped forge a near-term base. Stops are eyed in the 1.5370/90 window if weakness returns. 1.5480/1.5500 remains a formidable resistance area.
