Currencies experienced another see-saw session in NY trading, as disappointing data in the morning led to a slide in riskier assets, only to see most of the declines erased in the afternoon as risk sentiment regrouped.  The morning kicked off with a weaker than forecast ADP July national employment report that showed -371K jobs were lost instead of the -350K consensus forecast, which was better than the prior -463K in June (revised from -473K).  10 a.m. data saw an unexpected drop in the July ISM services index to 46.4 from June's 47.0 when an improvement to 48.0 had been expected, but this was partially offset by a +0.4% gain in June factory orders instead of the expected -0.8% decline.        
      
Risky assets, led by stocks and commodities, declined on the disappointing news, sending JPY-crosses lower and the USD higher.  EUR/JPY fell from around 137.30 to a low near 136.20 before recovering to 137.00 in late trading.  EUR/USD dipped from 1.4430 to just above 1.4350, maintaining the consolidation range since Monday's break higher, before bouncing back to a new high just shy of 1.4450 and finishing out around 1.4420.  USD/JPY saw a similar gyration, falling from about 95.40 to near 94.60, before finishing  out around 95.00.  There was little in the way of news to justify the rebound in risky assets, apart from a US investment house revising higher its 2H 2009 GDP forecasts from +1.0% to +3.0%, but most of the recovery had occurred before that news broke.  The price action suggests that risk appetites will remain in buy-on-dip mode until more compellingly negative news surfaces.        
      
In other markets, gold bounced around between roughly $968-958/oz and finished near $965.  Oil dipped below $70/bbl briefly on a larger than forecast weekly oil inventory increase, but rallied back with other commodities to end the day above $71.50/bbl.  US Treasuries started the day off weak, but then rallied on the softer US data, only to sell-off as stock markets recovered to post only small losses on the day.        
      
Key data releases ahead in Asia include the  NZ 2Q and Australian July employment reports.        

Upcoming Economic Data Releases (Asia Session) prior expected       

  • 8/5/2009 22:45 NZ  Unemployment Rate  2Q  5.00% 5.70%
  • 8/5/2009 22:45 NZ  Participation Rate (QoQ)  2Q  68.40% 68.20%
  • 8/5/2009 22:45 NZ  Employment Change (QoQ)  2Q  -1.10% -0.50%
  • 8/5/2009 22:45 NZ  Employment Change (YoY)  2Q  0.80% -1.00%
  • 8/5/2009 23:01 UK  NIESR GDP Estimate  JUL  -0.40% - -
  • 8/6/2009 1:30 AU  Employment Change  JUL  -21.4K  -18.0K
  • 8/6/2009 1:30 AU  Unemployment Rate  JUL  5.80% 6.00%
  • 8/6/2009 1:30 AU  Full Time Employment Change  JUL  -21.9 - -
  • 8/6/2009 1:30 AU  Part Time Employment Change  JUL  0.4 - -
  • 8/6/2009 1:30 AU  Participation Rate  JUL  65.30% 65.30%