London Session
International Trading
THE TECHNIQUE OF GIVING A GOOD MASSAGE
14 years ago
Tuesday, September 14, 2010
, Posted by Usman Ali Minhas at 8:18 AM
The rally in risk has shown signs of faltering overnight as economic data softened and demand for safe havens picked up. The Swiss franc, Japanese yen, US dollar, and gold strengthened as investors remained cautious about the state of the global economy. The safe haven Swiss franc reached parity against the dollar for the first time since December 2009 and gold crept towards near record levels. New Zealand retail sales for July fell to -0.4% from the prior +0.9% (cons. 0.0%) and core retail sales dropped by -0.1% from the previous 1.5%(cons +0.1%). This sent the Kiwi lower as NZD/USD declined to session lows around 0.7270 from nearly 0.7345.
The Japanese yen extended 15-year highs against the US dollar as the Prime Minister Naoto Kan claimed victory over challenger Ichiro Ozawa in a party vote. The election outcome saw the yen strengthen further as investors viewed the win by Kan as reducing the likelihood of government intervention. Finance Minister Yoshihiko Noda said today policy makers are prepared to take bold action on currencies if necessary. At this point, Noda’s comments of ‘bold action’ sound like a broken record and have been disregarded as the market pushes the yen higher. USD/JPY fell to new 15-year lows near 83.05 following the political developments.
UK data was mixed as we saw a drop in the August RICS house price balance below the expected -12% with a print of -32% from the prior -8%. August CPI MoM came in stronger than the forecast +0.3% with a rise to +0.5% from the prior -0.2%. YoY CPI also beat expectations with a print for August of +3.1% (cons. +3.0%, prior +3.1%) and core CPI climbed to +2..8% from the prior +2.6% (cons. +2.5%). The higher than expected inflation data sent GBP/USD higher initially to around 1.5440 however the pair has since pared gains to current levels just under 1.5400.
The German ZEW survey for September was released earlier and while current conditions jumped to 59.9, the highest since December 2007 (cons 50.0, prior 44.3), economic sentiment fell to -4.3 the lowest reading since February 2009 (cons. +10.0 prior +14.0). The economic sentiment component which measures the expectations of Germany’s future economic growth within the next six months has seen its fifth straight decline since April’s 53.0 print. The disappointing print sent the euro lower with EUR/USD declining from above 1.2900 to current levels of around 1.2830.
On the data front today we have Canada’s Q2 labor productivity, capacity utilization rate, and July new motor vehicle sales all set for release at 0830EDT. U.S. economic data includes August retail sales at 0830EDT and September IBD/TIPP economic optimism and July business inventories are due out at 1000EDT.
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