• Prices retrace most of Tuesday’s moves except USD/JPY
  • ADP employment report sees US losing 298,000 private sector jobs in August
  • US nonfarm productivity rises 6.6% in Q2, labor costs fall 5.9%
  • US factory orders rise 1.3% in July; lower than expected
  • Japan’s Hatoyama tells Obama US-Japan alliance vital to Japan
  • Fed’s Lockhart: Recovery underway but will be slow; asset bubbles should be pricked; inflation pressures low now, rising in later years. Deficits very big challenge for US finances and social security an Medicare spending mount
  • FOMC minutes: Downturn ending but caution remains on labor markets, credit losses, consumer spending. Rates to stay low a long time.
  • US consumer bankruptcy filings up 24% y/y, down 5% m/m
  • Gold leaps $25 to $979; oil unchanged at $68.05
  • 10-year notes at 3.30%; lowest since May

The dollar gave back a significant chunk of yesterday’s gains as gold broke a resistance line on the daily charts and ran up $25 on the day. The move remains curious as inflation looks quiescent, the dollar stable and equities rebounding after a sharp dip Tuesday. Seasonals got part of the blame, with analysts touting gold gains 15 out of the last 20 Septembers.

USD/JPY showed no propensity to bounce, trading down to 92.13 so far. Options-related bids ahead of 92.00 barrier were rumored but Asian buying over the last 24 hours has only helped slow the decline; so far it has been unable to reverse it. Softer US yields and fears that Japanese domestic welfare spending will soak up Japanese savings, leaving less to be shipped offshore. Reports of buying by Kampo and BIS in the USD/JPY were heard today.

There were sharp short-covering rallies in EUR/USD, AUD/USD and GBP/USD as prices regained the range bases that broke down yesterday at 1.4250, 0.8340 and 1.6250, respectively.

EUR/JPY fell as low as 131.01 before bouncing as protection of barriers at 131.00 caught the market short. A bounce to 131.77 played out.

I have to post this a tad early today as I have a doctors appointment. Would someone mind posting the close in the S&P in the comment section please?