Safe havens gain as risk-off trading continues

• USD mostly firmer except against the yen as risk off continues to see flows into the USD as a haven. Aug. NFIB small business optimism was in line with expectations at 88.1 (cons. 88.0). August import price index is due at 0830ET and expected to show a m/m decline of -0.8% (prior +0.3%) and y/y change of +12.5% (prior 14.0%). US 10-yr yields are flat and US stock futures are pointing to a slightly lower open.

• EUR remains on the back foot despite China reiterating its support for Europe to resolve the debt crisis. Italian auction of 2-, 5-, and 10-year notes saw yields higher. Yields on German bunds reached new record lows, the Italian-German yield spread hit record highs, and Greek 2-yr yields rose above 75% for the first time. Italy’s Berlusconi said Italy is ‘determined’ to balance its budget by 2013 and that parliament will approve the austerity plan tomorrow. EUR/USD currently around 1.3650

• GBP weaker after an uptick in CPI as expected in August (4.5% y/y prior 4.4%) and following dovish comments by the BoE’s Adam Posen. Posen said that the bank should expand its Asset Purchase Facility by a minimum of 50B pounds and as much as 100B pounds. He noted that growth forecasts are likely to worsen. GBP/USD is currently testing the 1.58 figure and GBP/JPY is declining in wave 5 of an impulse.

• CHF slightly weaker against the USD and EUR. EUR/CHF trading in a very tight range just above the 1.20 floor set by the SNB.

• JPY is stronger across the board as investors seek safety. Traders remain alert for official action from the MoF and BoJ as the yen advances. USD/JPY is below 77.00 and testing the 21-day SMA and Kijun line around 76.90 as a near term pivot level.

• AUD softer following Australian NAB business confidence for August which fell to -8 from the prior +2 and was the lowest level in more than two years.

Source: Forex.com

13.09.2011