Markets shift back into havens as uncertainty remains high

The U.S. dollar reversed earlier losses and firmed against all of the G10 except against the JPY as traders shifted back into safe havens. The relief rally was unable to extend gains in risky assets as equities declined and the high beta currencies NZD, AUD, and CAD were the worst performers against the greenback today. Markets took risk off the table and remained cautious ahead of key events tomorrow which include the release of the U.S. 2Q final GDP as well as the German vote on EFSF enhancements.



The GBP resumed its decline as the case for more QE seems to be gaining more support. BoE’s Miles on the wires saying he may be moving closer to voting for additional QE and noted that that the Bank has ‘substantial ammunition’. GBP/USD fell from session highs of around 1.5675 to current levels of about 1.5565 which is below the pivotal Tenkan line that comes in around 1.5585.



EUR/CHF was relatively flat and currently trading at about 1.2180 following comments by the SNB Vice Chair Thomas Jordan. He reiterated that while recent actions have taken a ‘considerable toll’ on the bank’s balance sheet, the SNB will continue to use all measures available to defend the CHF cap and maintained that the SNB will be able to return to profit in the long term.



Economic data released today showed August U.S. durable goods orders slightly better than expected with a headline reading of -0.1% from the prior +4.1% (cons. -0.2%). Durables ex transportation was also slightly better with a decline of -0.1% from the previous -0.2% (cons. -0.2%).



U.S. equities started the day to the upside but were unable to hold onto gains as markets closed in the red near the lows of the session. The Dow Jones Industrial Average finished the day lower by around -1.60% and the S&P 500 fell by about -2.06%. Commodities declined on the back of a firming USD with gold, silver and oil currently down by around -2.73%, -6.86% and -4.44% respectively. The drop in oil came as weekly DOE U.S. crude inventories showed a rise to 1915K from the prior week’s -7336K. This weighed on the Canadian dollar which fell sharply against the USD as USD/CAD moved back above the 1.03 figure.



On the data front for the upcoming Asia/Pacific session are Japan’s August retail trade and weekly securities investments abroad figures. Australia will see August job vacancies data released.

Source: Forex.com

28.09.2011