- PM Fillion: French GDP “at least 1.5%”; up from 1.4% government estimate
- US wholesale inventories rise 1.3% in July; sales rise 0.6%–stronger than expected
- Obama rehashes new economic proposals in press conference; appoints Goolsbee to chair of Council of Economic advisers
- Ex-Fed chair Volcker: Europe’s problems threaten sustainability of euro
- BOC’s Carney: US slowdown has implications for Canada, monetary policy
- S&P 500 rises 0.5% to 1110
- US 10-yr note closes at 2.79%, up 4 bp
The markets got off to a fast start in the US, spurred by dumping of the CHF during the European morning, helping raise risk appetites among participants. That lasted about an hour, then we more or less fell to sleep. A brief blip after the London fixing livened things up temporarily but the afternoon hours were dreadfully dull.
EUR/USD’s moment in the sun came around the time of the fixing as prices rallied from about 1.2710 just before the fixing to a high of 1.2745 about 30 minutes later. Traders were reluctant to press their luck, mindful that the SNB has been a seller of EUR/USD into strength above 1.2750 all week.
The Volcker comments on Europe helped prompt a pullback to the 1.2715 level. We spent the bulk of the afternoon range trading within 10 pips of 1.2720.
USD/JPY was bid early in the session on easing risk aversion and on rumors that the MOF may order intervention in advance of Tuesday’s DPJ leadership vote. We reached 84.39 before selling by a US investment bank in London capped the advance. We close at 84.16. For the week, we are virtually unchanged.
EUR/CHF was the star attraction early in the day, exploding to 1.3075 from 1.2865 in early European trade. Model funds were blamed for the heavy buying which set off stop-losses above 1.2960 and again above 1.30. We retraced more tha 50% of those intraday gains and end at 1.2955. USD/CHF reached 1.0278 on stop-loss buying before A US investment bank took profits. We close at 1.0190.
AUD/USD performed well today as risk aversion declined further. It ends the week near its highs, at 0.9263. CAD did not keep pace today on dovish comments from the BOC’s Carney. It closes at 1.0355. Well above Thursday’s lows near 1.0300.