- ADP employment report -254,000; weaker than expected
- Q2 US GDP revised higher to -0.7% versus -1.0% expected
- Chicago PMI drops to 46.1 in September versus expected 52.0
- US mortgage delinquencies rise to 8.5% of mortgages outstanding from 7.7% in Q1
- Fed’s Lockhart, Kohn remain in “lower for longer” camp
- USD share of global reserves falls to 62.8% in Q2 from 65.0% in Q1: IMF
- ECB’s: Liikenan and Orphanides –prepare, but don’t implement exit strategies yet
- S&P 500 ends 0.3% lower at 1057, up 2.6% for the month
- Gold rises $15 to 1006; oil spikes $3.64 to $70.35
Loads of rumors today, the most prevalent of which was that there was an order to sell EUR 3.5 bln for an intergovernmental payment from the EU to the UK (the opposite of the typical monthly flow). EUR/GBP fell sharply in London but the market either sold far more than EUR 3.5 bln or the order was smaller than rumored because the EUR/GBP cross ended up bouncing to fresh session highs late in London trade, reaching 0.9160 from 0.9080 lows.
EUR/USD was quite choppy, dropping to 1.4580 during the US morning before rebound close to overnight highs at 1.4675 before stalling. We recovered from the lows ahead of the month end fixing and extended gains in early afternoon as share prices recovered and commodities rallied.
USD/CHF and EUR/CHF saw several rounds of intervention from the SNB today. They were quite “loud” in the execution of the orders, clearly trying to get the message to the market that a weaker franc is still desired. They bought USD/CHF at 1.3040 during the New York afternoon, a surprise to the market. Traders note that the SNB has intervened each time the ECB has conducted a 1-year refi tender to absorb EUR/CHF sales linked as lenders to Eastern Europe borrow from the ECB and buy CHF to fund loans made during the credit bubble.
USD/JPY traded very quietly between 89.40 and 89.80 with some half-year end sales seen weighing on USD/JPY for Japanese repatriation though there was talk of solid USD/JPY buying mixed in at the fixing.
AUD USD sold off briefly after stocks dumped in the wake of weak Chicago PMI data. Stops were triggered below 0.8780 but prices soon recovered as the buy-the-dips mentality remains very strong. Solid sell orders between 0.8830 and 40 were absorbed before a test of an 0.8850 barrier stalled the rally. We end at 0.8830.
It should be an interesting end of the week with loads of data to keep markets hoping. I wish I could be here but I’m off for a few days. Safe trading, and see you Tuesday.
