Weaker data out of China overnight continued to weigh on risk trades during the NY session, with commodity currencies (AUD, CAD, and NZD) coming under pressure. Slower Chinese exports and imports suggest waning demand for commodities and thus diminished appeal of holding long AUD or CAD positions, in particular. Negative banking analyst comments hurt financial shares in the US, which led broader markets lower by more than 1%, sending JPY-crosses (carry trades) lower in tandem. To top things off, stronger US 2Q non- farm productivity and lower unit labor cost data suggested inflation is not an imminent threat, inspiring a rally in US Treasuries and a drop in yields, adding to pressure on USD/JPY and other JPY-crosses.
EUR/USD held to a relatively narrow range between about 1.4110/90, while USD/JPY slid from 96.50 to a low near 95.75, before recovering to close near 96.00. As a result, EUR/JPY slipped from about 136.70 in early NY trading to a low near 135.20, before recovering to close near 136.00. AUD/USD fell from around 0.8350 to a low around 0.8275 and a close near to 0.8300. USD/CAD continued to grind higher, breaking up from about 1.0950 to a high near 1.1050, as crude oil prices slipped below $70/bbl to close near $69.50 in sympathy with lower commodity prices elsewhere.
The market is gearing up for the FOMC's interest rate decision tomorrow afternoon at 2:15 pm, though few are expecting any major changes from the Fed.
Upcoming Economic Data Releases (Asia Session) prior expected
- 8/11/2009 23:50 JN Domestic CGPI (MoM) JUL -0.30% 0.00
- 8/11/2009 23:50 JN Domestic CGPI (YoY) JUL -6.60% -8.70%
- 8/12/2009 1:00 AU Westpac Consumer Confidence AUG 9.30% - -
- 8/12/2009 1:30 AU Wage Cost Index QoQ 2Q 0.80% 0.80%
- 8/12/2009 1:30 AU Wage Cost Index YoY 2Q 4.20% 3.80%
- 8/12/2009 4:30 JN Industrial Production (MoM) JUN F 2.40% - -
- 8/12/2009 4:30 JN Industrial Production YOY% JUN F -23.40% - -
- 8/12/2009 4:30 JN Capacity Utilization (MoM) JUN F 8.00% - -
