- Canadian GDP falls 3.4% in Q2, worse than expected
- New York Fed’s Dudley: Fed’s balance sheet likely to reach $2.5 trln; Fed unlikely to curtail asset purchases until full amounts acquired; Fed not monetizing debt; no desire to lose grip on inflation
- Chicago PMI surges to 50 in August from 43.4 in July; stronger than expected
- NY NAPM rises to 55.3 in August from 48.3 in July
- Hong Kong purchasing managers index rises to 52.8 from 49.9 in July
- ECB’s Nowotny: Too early to declare end of tough times
- Merkle/Sarkozy: Focus on banks at G20
- S&P 500 index falls 0.85%; 10-year note closes at 3.40%
Month-end interest to sell dollars dominated markets in thin trade today. Asset managers needed to trim dollar exposures which grew with the market capitalization of their funds during the month of August. It is counter-intuitive, but a good month for stocks leads to a bad month-end for the dollar, and vice-versa.
EUR/USD began to rally strongly about an hour before the month-end fixing at 15:00 GMT and continued until the the minutes just ahead of 15:00 when the market found itself a shade long. From 1.4367 highs we dipped to about 1.43505 at the fixing. Cable brushed 1.6300 in the month-end rally while USD/JPY dipped toward the 92.60s again.
Commodities traded weakly today but signs of economic life from the US helped boost commodity currencies from their overnight lows. News that China may default on commodities contracts spooked the markets early, but month-end helped underpin both AUD and CAD. AUD/USD ends at 0.8445 and USD/CAD at 1.0945.
