• Irish central bank: No need for outside financial assistance from EU
  • US GDP revised to +1.7% in Q2, slightly stronger than forecast
  • Canadian GDP falls 0.1% in July; market feared larger fall
  • US weekly jobless claims fall to 453,000; better than expected
  • Chicago PMI rises sharply; 60.4 from 56.7
  • Portugal says new austerity measures will help avoid needing stability funds from EU
  • Housing prices to keep RBA sidelined? SMH asks
  • BOC’s Carney: Growth seen more modest in second half, economy slowed more than expected
  • US 10-year note yields rise 1 bp to 2.51%. Month-end demand for long maturities offset the strong US economic data. 2.58% was the intraday high yield
  • S&P 500 falls 0.3% to 1141; oil rises to $80, up $2.00; gold recovers intraday losses, ends at $1308 as dollar eases late in session

It was one of the wilder month-ends in recent memory with rumor and counter-rumor making the rounds combined with strong flows and flows that failed to materialize. All of this led to volatile markets and a confused participants.

EUR/GBP was the most active pairing of the morning, swinging violently amid reports of a large EUR sell order for the annual EU farm subsidy rebate to the UK. The orders was rumored at around EUR 3.5 bln. It looks as though the market got ahead of the order and sold well in excess of 3.5 bln EUR and had to scramble to get them back. Exacerbating the squeeze was the usual month-end demand for EUR/GBP by the Bundesbank. EUR/GBP rocket from early London lows of 0.8560 to a high of 0.8685 and it ends near its highs.

The components each gyrated as well. EUR/USD rallied as high as 1.3684, a fresh trend high in the wake of the ECB fixing before sliding late in the European session as the 15:00 GMT fixing was replete with EUR/USD sellers despite reams of research predicting dollar sales at month-end…We fell as low as 1.3575 before Asian and Mid-East central banks broke the euro’s fall. We close the session at 1.3635, keeping the EUR uptrend quite intact.

GBP/USD was sold for much of the US session, particularly at the 15:00 GMT fixing which pushed the pound down from 1.5775 to 1.5670 before it stabilized.

AUD/USD was sold heavily at month-end, triggering stops below 0.9660/65 support. We slipped as low as 0.9625 intraday. An article in the Sydney Morning Herald suggest that a dip in Australian home prices may dissuade the RBA from tightening further in the near-term. We end at 0.9670.

USD/CAD was choppy. It dropped sharply after GDP fell only 0.1%. The finance minister tipped a weak report yesterday so traders were relieved it was not much less negative. Rallying crude oil helped offset dovish comments from BOC Governor Carney. We fell from 1.03 to 1.0235 on the GDP report before rallying to 1.0325 on upbeat Chicago PMI data which lessens the need for the Fed to ease quantitatively if the strong data is born out in the ISM report tomorrow.