NY trading witnessed the unwind of risk taking despite what was better than anticipated economic data. US equities ended the day about flat after being up about 1% in early trading. In the US, the Chicago Fed National Activity Index (which does a great job of predicting GDP) improved to -0.74 in July from -1.82 the prior month. North of the border, Canadian retail sales blew away expectations and rose 1.0% in June on both the headline and excluding auto sales. The latter report helped nudge USD/CAD to the intraday lows of 1.0727 but the subsequent relapse in equities saw the pair grind back towards 1.0770 ahead of the NY close.
The dollar was decidedly better bid on the back of the risk-off trade. Gold played a major role in USD strength as the precious metal melted down to a 939.80 low after trading as high as 956.95 earlier on. Hearing physical demand is helping to contain the losses at current levels. EUR/USD lost some decent ground as well and the pair fell from a NY high above 1.4340 towards the 1.4300 zone at last look. The 1.4275 level is the one to watch and looks like the pivot for the next big move here – below opens up potential for a retest of 1.4200 next. The yen crosses were predictably sold on the equity decline. EUR/JPY saw one of the more pronounced moves, slipping from near 136 highs to a 135 NY low – the cross should see further weakness if it dips below there.
It looks relatively quiet in Asia now in terms of economic events, but the action will heat up in London trading with German GDP on tap.
Upcoming Economic Data Releases (Asia Session) prior expected
- 8/25 3:00 GMT NZ RBNZ 2yr Inflation Expectation 3Q 2.20% - -
