Risk was undoubtedly on in the NY session as anticipation that earnings will continue to surprise to the upside and slightly better economic data provided a catalyst. Ahead of a plethora of bank earnings in the next two days, stocks extended higher with the S&P popping nearly 3% to back above the 930 level. The question is whether this will be a ''buy the rumor sell the fact'' story and is the market indeed getting ahead of itself. If so, even slightly better than anticipated earnings could prove too little to sustain the current rally.

The highlight on the economic data front was the NY Empire manufacturing index and it was ''less bad''. The details were more upbeat than not as new orders turned positive for the first time since the Lehman collapse, printing a +5.9 in July from -8.2 the prior month. Shipments also improved to +10.9 from -4.8 and the highest result in one year. Prices paid jumped to +10.4 from -5.8 while prices received rose more modestly to -8.3 from -12.6, suggesting some sizeable margin compression (not good news for earnings). Employment was the other rub and it printed -20.8 from -21.8, showing little improvement and suggesting a double-digit US unemployment rate is on the way in the months ahead.

FX took its cue from the equity space and saw the yen crosses trade decidedly higher. AUD/JPY traded from a NY open near 74.60 to sit just below 76 as the close approached. CAD/JPY went parabolic from about 83 towards the 85 area. EUR/JPY was no slouch, rocketing from an open by 131.50 to a high of 133.40. Hourly momentum is pointing to a potential reversal from seemingly overbought conditions in this space. Should we get the snap back in shares on disappointing earnings over the next few days, look for some nasty reversals in the yen crosses to say the least.

Upcoming Economic Data Releases (Asia Session) prior expected

  • 7/15 22:30 GMT NZ  Business NZ PMI  JUN  42.7  - -
  • 7/15 22:30 GMT NZ  Business NZ Publishes Performance of Manufacturing Index
  • 7/15 22:45 GMT NZ  Food Prices (MoM)  JUN  0.30%  - -
  • 7/15 22:45 GMT NZ  Consumer Prices (QoQ)  2Q  0.30%  0.50%
  • 7/15 22:45 GMT NZ  Consumer Prices (YoY)  2Q  3.00%  1.80%
  • 7/15 23:50 GMT JN  Tertiary Industry Index (MoM)  MAY  2.20%  0.30%