Lots of bits and pieces to digest, but unsurprisingly a quieter session than the start of the week with an underlying positive sentiment led by the recovery in stocks and higher Chinese GDP data.
We opened in Asia following the sharp move lower in USDJPY in the cross over period between here and NY, falling around 100 ticks to 78.48 and triggering stops on the way down. By the time Asian traders were at their desks the dust had settled and cross/jpy pairs opened bid as Japanese retail investors were supposedly reinstating longs after having had margin stops triggered overnight. Unsurprisingly Noda took to the wires to re-read his usual speech that they are monitoring FX moves closely, but no sign or rumour of any official buying has been noted.
EUR and risk generally traded bid as stocks futures recovered into our session following the sell off post Irish downgrade. The market was caught a little short having sold it down to 1.3951 in early trading, seeing Euro pop higher in a flurry to 1.4038 and Aud triggering some light stops sitting above 1.0630/40. The AUD move capped as consumer confidence came in lower bringing the pair back below 1.06.
Chinese GDP jumped to 9.6% for the year (vs 9.5% exp) and cements the previous higher inflation numbers and helps relieve concerns of a hard landing triggering a global setback. Equities jumped around 0.25% and AUD traded swiftly from 1.0595 to 1.0630 and EURUSD jumping around 40pts to 1.4010. This kept pressure on USD/Asia and by proxy kept a slight offer on the dollar in the G10 space. The market settles with what looks like little appetite to chase moves after a frantic couple of days.
HOUSE SPEAKER BOEHNER SAYS NEGOTIATORS CONSIDERING SEVERAL BACKUP PLANS TO AVOID U.S. DEFAULT
*AUSTRALIAN JULY CONSUMER CONFIDENCE FALLS 8.3%, WESTPAC SAYS *AUSTRALIA JULY WESTPAC CONSUMER CONFIDENCE INDEX FALLS TO 92.8
*CHINA SETS YUAN REFERENCE RATE AT 6.4728 AGAINST U.S. DOLLAR
*CHINA’S JAN.-JUNE GDP GROWS 9.6% FROM YEAR EARLIER
HSBC Global Research