Stocks bounced back and the USD gave back some of its recent gains as risk appetites steadied somewhat on small gains in single family housing starts.  The NY market had a consolidative tone to it overall, and after an initial set-back on weaker than expected July housing starts and building permits data, traders found a silver lining to latch on to.  July US housing starts dipped from a revised 587K to 581K (vs. a forecast increase to 599K) and building permits fell from 570K to 560K (vs. a forecast gain to 577K.  The silver lining was an increase in the number of starts and permits for single family dwellings, which are frequently viewed as a leading indicator for broader housing market direction.  US July PPI data revealed a larger than forecast decline in wholesale prices, with the headline PPI dropping -0.9% MoM (forecast -0.3%) and the core PPI excluding food and energy falling -0.1% MoM (forecast +0.1%).        
      
Currencies, stocks and bonds initially reacted negatively to the disappointing headline data on housing, with carry trades (JPY-crosses) dropping sharply, but then later began to stabilize and recover after floor trading opened.  USD/JPY fell as the more benign PPI report led to brief gain in US government bonds, sending Treasury yields lower and weighing on USD/JPY.  But the optimism reflected in the a better than expected August German and Eurozone ZEW economic sentiment reports carried the day, with JPY-crosses rising and US stocks gaining about 1%.  Gold prices regained some lost ground as the USD softened on better optimism, rising about $3.60 to around $938/oz.  EUR/USD held to a narrow range between about 1.4070 and 1.4150, while GBP/USD surged higher on short-covering and heavy EUR/GBP selling.  Despite the rebound in risk assets since Monday's washout, investor sentiment remains mostly nervous, keeping the USD better supported and the JPY-crosses mostly offered.      
      
Upcoming Economic Data Releases (Asia Session) prior expected

  • 8/18/2009 22:45 NZ  Producer Prices- Inputs (QoQ)  2Q  -2.50% -1.00
  • 8/18/2009 22:45 NZ  Producer Prices- Outputs (QoQ)  2Q  -1.40% -0.50
  • 8/18/2009 23:20 AU  Reserve Bank Assistant Governor Malcolm Edey Speaks in Sydney  18-Aug
  • 8/19/2009 1:00 AU  Westpac Leading Index (MoM)  JUN  -0.20% 
  • 8/19/2009 3:30 AU  Treasury Secretary Ken Henry Gives Speech in Sydney  19-Aug  
  • 8/19/2009 4:30 JN  All Industry Activity Index (MoM)  JUN  0.70% 0.30
  • 8/19/2009 6:00 JN  Machine Tool Orders (YoY)  JUL F  -72.20% - -