The risk trade remained in vogue in NY trading and the greenback ultimately suffered the consequences. Equities extended what we deem to be a rather unsustainable rally and rose 1% for the fifth consecutive session. This was not confirmed by the bond market, which also rallied. The 10-year yield collapsed more than -12 basis points to 3.35% as a strong 30-year auction showed robust demand for US paper. Gold trended higher in NY trading after a downbeat overnight but the $1000 level remains elusive nonetheless.
Economic data were mixed and murky. US and Canadian trade both printed lower than expect with the US deficit now -$32.0 billion while Canada slipped into a -1.4 billion shortfall. Initial jobless claims in the US sank to 550K from a prior 576K (revised from 570K) but the report was fraught with seasonal adjustment difficulties surrounding the Labor Day Holiday. In other words, we could see a snap back up next week. The other piece of important news was oil inventories and they sank -5.9 million on the week. The market was looking for a -1.8 million draw, so the surprise was palpable. Oil actually traded lower, however, as buying was prevalent ahead of the number and profit taking dominated once the news was out.
EUR/USD tested the air above 1.46 once again multiple times and talk was that a 1.4615 knock-out option was being vehemently defended. This type of option expires worthless should that specified price level trade. The short-term pivot seemingly lurks near 1.4500 and below opens up potential for a move back to the 1.4470/60 nearby lows. Cable remained firm after rocketing higher following the BOE decision to keep its asset purchase plan steady. The pair popped to a session high 1.6687 before settling near the 1.6650 area.
Upcoming Economic Data Releases (Asia Session) prior expected
- 9/10 22:45 GMT NZ Food Prices (MoM) AUG 0.60% - -
- 9/10 23:50 GMT JN GDP Annualized 2Q F 3.70% 3.70%
