Daily Trading Stance - Asia Sep 8 (Click link to view)

• The EUR slid o/n amid renewed concerns on the European financial sector as a WSJ article doubted the stress tests had underestimated the banks’ exposure to sovereign debt. Poor German factory orders data added to the pressure
• Slow day on the data front in Asia – Bank of Canada rate announcement will be the highlight for North America

EUR slides on renewed concerns on sovereign debt, poor German data

Europe was the market’s major focus overnight as last week’s positive jobs data faded into the distance. European sovereign debt concerns reemerged following a WSJ article claiming that the European bank stress tests had under estimated the exposure to sovereign debt while a poor number for German factory orders (for a change!) was the final straw that sent the EUR tumbling lower.

There were no data releases of note from the US so Wall St took its cue from concerns in the European financial sector and retraced some of last week’s impressive gains – the DJIA down 1.03%, S&P -1.15% and the Nasdaq -1.11%. The only data release was the weekly ABC consumer confidence reading which improved (?) 2 ticks to -43 but has now failed to regain sub -40 levels since late-April 2008.

For today, Asia has an early slew of Japanese data to contend with – money supply, bank lending, machine orders, current account and trade balance. Australian home loans complete the morning session with more Japanese data – bankruptcies and economy watchers surveys – to complete the session. Heading into Europe and we have German trade data, UK house prices and industrial production, Swedish GDP and German industrial production on tap while the North American session is dominated by Canadian data with building permits and the Bank of Canada rate announcement all scheduled.

Daily Trading Stance - Asia Sep 03 (Click link to view)

• There was some more positive news out of the US overnight with pending home sales better than expected and weekly jobless claims showing further improvement from the poor 500k print a few weeks ago.
• UK disappointed with some very weak house price data and GBP underperformed
• ECB left rates unchanged, upgraded 2011 GDP forecasts; Sweden’s Riksbank hiked rates 25bp to 0.75% as expected
• US non-farm payrolls and unemployment will be the major focus today ahead of a long weekend for the US

Currencies locked in ranges despite better US data

Currencies were contained within ranges overnight despite some more positive news on the US data front. Pending home sales grabbed the headlines with a much better-than-expected outcome, up 5.2% m/m vs. -1.0% expected, while the weekly initial jobless claims came a close second with a 472k report, lower than the upwardly revised 478k last week and below consensus of 475k.

On the European front, the ECB left rates unchanged as expected and Trichet’s press conference held nothing new, apart from tiny shifts in comments of upside/downside risks. Notably the EUR was unable to push any higher even after ECB staff upgraded forecasts for 2011 GDP. UK disappointed with some poor house price data. The Nationwide report showed a sharp decline in August (-0.9% m/m), though still up 3.9% y/y. Nevertheless, the pound succumbed to selling pressure and was an underperformer against its peers. Elsewhere, the Riksbank hiked rates by 25bp to 0.75%, as expected, and this gave the SEK some support.

Wall St responded positively to the better data, the DJIA gaining 0.49%, the S&P +0.91% and the Nasdaq +1.06%, but the response in currency markets was quite muted. This is likely due to the major release of US non-farm payroll and unemployment numbers later today and the long weekend holiday in the US. Market consensus is for a loss of 105k jobs, an improvement from July’s -131k, but unemployment is expected to worsen to 9.6% from 9.5%. Saxo’s view is marginally more pessimistic with a loss of 125k jobs and unemployment at 9.6%.

Apart from the US non-farm payrolls, Asia has Japan capital spending and China non-manufacturing PMI on tap. Europe focuses on services PMI from Germany, EU and UK along with Euro-zone retail sales. In addition to the unemployment data, the North American session has the non-manufacturing ISM data before the long Labour Day weekend.

Daily Trading Stance - Asia Sep 01 (Click link to view)

• Wall St spluttered into the end of August after US data came in mixed. Consumer confidence beat forecasts on the headline but a touch disappointing in the components, CaseShiller house prices rose more than expected but the Chicago PMI was a touch below forecast at 56.7 vs. 57.0
• FOMC minutes showed Fed officials concerned about increased downside risks to growth and inflation though no specific discussions on detailed options for further easing
• A slew of data today to kickstart September which will likely give good indication for September

Looking ahead to a busy data day at the start of September

Wall St spluttered into the close of August with a less-than-impressive display, though at least broad-based declines were halted and the S&P held the 1,040 mark on the month. US data points were a mixed bag yesterday with consumer confidence beating expectations, rising to 53.5 in August from 51.0 in July (though the sub-components of the index were not quite as bullish as the headlines with most improvements seen in the expectations part) while the Chicago PMI fell just short of expectations with a 56.7 print from 62.3 previously (and an expected 57.0). Meanwhile CaseShiller house prices were up 1.0% m/m, 4.2% y/y which was more than consensus.

The FOMC minutes of the last meeting indicated that some Fed officials were not comfortable with the final statement that was issued with some expressing concerns that reinvesting repayments of principal from agency debt and MBS would eventually make the exit path more difficult. On the economy, some members were worried about increased downside risks for both growth and inflation but there was little discussion on detailed options for further easing.

As we start a new month we have a slew of economic data releases to help determine the direction for risk. For Australia one of the key releases will be Q2 GDP with the AiG performance of manufacturing index just prior to that. PMI data from China will likely be next in line for attention and NZ commodity prices completing the Asian session. Heading into Europe and we have German retail sales, PMI surveys from Sweden, Norway, Switzerland, Germany, Euro-zone and the UK on tap. For the US session we can expect Challenger job cuts and the private ADP employment change along with the ISM manufacturing and prices paid indices and concluding with construction spending for July.

Daily Trading Stance - Asia Aug 31 (Click link to view)

New Format!

• The UK holiday saw currencies rangebound early in the session but as North America entered, an air of risk aversion crept into dealing. US data mixed – personal income/spending below/above expectations respectively. European confidence indicators on balance a touch better but couldn’t help support the EUR
• Wall St gave back most of Friday’s post-Bernanke gains
• Month-end today so Asia risks trading ranges before fixing flows appear in the London and NY sessions
• A full data calendar today to finish off the month