Risk was decidedly back on in NY trading as more upbeat data, a healthy Treasury note auction and better earnings reports provided more than enough impetus. US initial jobless claims were a touch higher than estimates but the fact that they remained below 600K in a week where the market was braced for a large statistical pop was ''less bad'' news. The 7-year Treasury auction was a healthy one and the bid/cover came in at 2.63 vs a three-auction average 2.45 while indirect bidders (foreign central banks) took 63% of the offering vs a recent 44% trend. Participants paid -3bps through the market rate, suggesting little upside pressure on yields for now. All in, it is good medium-term news for the USD after the sloppy 2- and 5-year auctions earlier this week. Risk also liked it though and this kept the US dollar better offered for the most part.

Earnings continued to beat expectations and with more than 40 companies reporting today, the market had a lot to chew on. Of those that reported, 77% beat analyst projections and the aggregate surprise was 14% better than anticipated. The bottom line numbers continue to be flattered by massive cost cutting measures and with a US consumer in full deleveraging mode, we remain cautious about the sustainability of these results in the quarters ahead. Ultimately, the S&P came extremely close to testing the air above 1000 today but the 1K hats will have to remain in the drawers for now. The final 30 minutes of trading saw a sharp exodus of longs and the index closed up 1.2%, about -1% from the intraday high.

The US dollar came under decent pressure on the back of the risk appetite. The dollar index edged down just a modest -0.3%, however, as EUR failed to gain much ground against the buck. Headlines out of the IMF that the common currency is overvalued by up to 15% dented hopes for a big rally. EUR/USD was sitting near the NY open after making a session high around 1.4087. The yen crosses saw a little more action and EUR/JPY squeezed up to a 134.89 high before backing off more than 50 pips on the late day selling of stocks. AUD/JPY soared from a NY open near 78.50 to a 79.30 highs before backing off as well. The rally in risk remains extremely erratic and we'll have to see what kind of follow-through occurs in overseas marts overnight. One thing is for sure, expect the yen crosses to trade in tandem with risk appetite.

Upcoming Economic Data Releases (Asia Session) prior expected

  • 7/30/2009  23:01 GMT UK  GfK Consumer Confidence Survey  JUL  -25  -23
  • 7/30/2009  23:15 GMT JN  Nomura/JMMA Manufacturing PMI  JUL  48.2  - -
  • 7/30/2009  23:30 GMT JN  Jobless Rate  JUN  5.20%  5.30% 
  • 7/30/2009  23:30 GMT JN  Household Spending (YoY)  JUN  0.30%  0.40%
  • 7/30/2009  23:30 GMT JN  Tokyo CPI YoY  JUL  -1.50%  -1.70%
  • 7/30/2009  23:30 GMT JN  Tokyo CPI Ex Food, Energy YoY  JUL  -1.00%  -1.10%
  • 7/31/2009  0:30 GMT AU  TD Securities Inflation YoY%  JUL  1.40%  - -
  • 7/31/2009  1:30 GMT AU  Private Sector Credit YoY%  JUN  3.90%  3.40%