The NY session saw a sharp reversal in risk appetite as poor economic data led stocks lower. The S&P managed to eke out a late day rally and lost only -0.3% on the day after falling more than -1.0% in early trading. US consumer confidence surprised to the downside and printed 46.6 in July after a 49.3 read in June. The real rub was the decline in the labor differential which slipped to a 17-year low of -44.5 and is not a good sign for the employment outlook. Bonds saw a mixed day as early gains were reversed somewhat by an overall messy 2-year Treasury auction. The bid/cover came in at 2.75 and this compares with a three-auction average 2.95. Indirect bidders (typically foreign central banks) accounted for just 33% versus a three-auction average 51%. The auction was a USD negative at the margin but the downward momentum in risk supported the buck nonetheless.

EUR/USD suffered a sharp squeeze towards the 1.4131 session low before recovering about 40 pips into the close. The pair remains in the 1.4150/75 range that has been prevalent over the last few hours and a snap to either side of this range should see a more sustained directional move. The drop in EUR/JPY was even more pronounced as it fell more than three big figures from the overnight highs to a NY low of 132.91. The cross climbed back above the 200-hour sma at 133.94 ahead of the close and this should now be decent short-term support here. The 100-hour sma lurks at 134.70 and is the one to watch overnight. The Canadian dollar saw some good price action as well on the back of the leg-down in the commodity space. USD/CAD rocketed to a 1.0907 high in the session before edging down nearly 100 pips in the latter half. 1.0811 is the 21-hour sma and is providing good support momentarily. Below sees a likely spill to 1.0780 initially.

Upcoming Economic Data Releases (Asia Session) prior expected

  • 7/28/2009  22:45 GMT NZ  Building Permits MoM  JUN  3.50%  -5.00%
  • 7/28/2009  23:50 GMT JN  Large Retailers' Sales  JUN  -6.50%  -6.00%
  • 7/28/2009  23:50 GMT JN  Retail Trade YoY  JUN  -2.80%  -2.50%
  • 7/28/2009  23:50 GMT JN  Retail Trade MoM SA  JUN  0.00%  0.40%
  • 7/29/2009  3:00 GMT NZ  NBNZ Business Confidence  JUL  5.5  - -
  • 7/29/2009  5:00 GMT JN  Small Business Confidence  JUL  38  - -