- Empire State Manufacturing index soars to +12.1 in August from -0.55 in July; inventory replenishment helping manufacturing but final demand remains slack
- Fed extends TALF program into 2010
- TIC flows heavily positive in June; reverses May outflow; Net in-flows $90.1 bln.
- Norwegian sovereign wealth fund (second largest in world) says underweight US Treasuries; manager doesn’t like supply/demand picture
- NAHB builder sentiment index 18 in August from 17 in July
- Fed senior loan officers survey: Credit still tight, but slightly less than prior month
- S&P 500 closes down 2.4%, below 1000 at 979.73
- US 10-year notes fall 7 bp in yield to 3.47%
- Oil closes down $1.25,at $66.68, well above session lows; CRB loses 1.6%
The market was a one-trick pony today as currencies essential repriced themselves in early trade in reaction to the big fall in global equity markets today, with Shanghai’s nearly 6% decline the clear catalyst. Once the major repricing was complete, there were only minor modifications made throughout the rest of the session. It turned out to be a surprisingly dull session.
EUR/USD fell as low as 1.4046 early in the US trading day but traders were reluctant to push prices too aggressively to the downside amid the usual concerns that China will vigorously protect the 1.4000 level where exotic triggers are struck. Rebounds were limited to the 1.4090/95 region.
USD/JPY’s slump reached its nadir at the 15:00 GMT fixing at 94.19. It gradually edged up to 94.51 in late afternoon.
AUD and CAD were cracked, as one would expect amid rapidly shrinking risk appetites and falling commodity prices. USD/CAD raced up to 1.1124 on short-covering while AUD/USD slipped to 0.8155 before rebounding to 0.8248. Both pairs modestly overcame recent range extremes before finding their footing.
Cable fell hard to 1.6273 and closed below important (now) resistance at 1.6388. It rebounded to 1.6340s in the afternoon. EUR/GBP gave back some of its morning gains, giving the pound a moderately bid tone late in the day.
Economic data had no impact on the markets today in New York and will likely have little effect overnight as asset markets remain firmly in the spotlight.
