North American Summary and Highlights 5 August

North American session

Equities opened sharply weaker but saw a partial correction assisted by a firmer ISM services index of 51.4 from 48.8, with employment at 51.1 from 46.1 reaching its highest level since September. This saw USD/JPY recovering from near 142 to 144.89, before slipping back to around 143.75 as the equity recovery faded. The commodity currencies saw modest gains, AUD/USD reaching .65. EUR/USD briefly touched above 1.10 in early trade before settling near 1.0955. GBP/USD was fairly stable around 1.2770. USD/CHF was more volatile with eyes on equities but ended little changed near .85.  

Fed’s Goolsbee again downplayed the weakness of Friday’s employment data, without sounding hawkish. The Fed’s Q3 Senior Loan Officer Opinion Survey of bank lending practices saw less negative findings than in Q2. The latter had no market impact with the equity recovery having lost momentum. 

European morning session

A volatile European morning session initially saw the JPY fall back after overnight gains, with USD/JPY gaining 2 figures to 144, but the early USD/JPY rally was reversed by the end of the session, with USD/JPY once again dipping below 142. EUR/CHF gains were more sustained, rising above 0.93 from an early dip to 0.9210. EUR/USD finished slightly higher at 1.0955 after an initial dip from 1.0940 to 1.09, while GBP/USD was marginally lower at 1.2770 from an open near 1.28, although this was a recovery from the lows at 1.2720. AUD/USD recovered to late Asia levels around 0.6450 after an initial sharp dip to 0.6350. Scandis were net little changed in Europe after losses in late Asia. 

Equity futures were also net little changed after the big Asian losses, as were US yields, although European yields were slightly lower. There was no news of any real note, with final services PMIs little changed from the preliminary releases. The first release of Swedish services PMI showed its third consecutive rise, but was still below the March high of the year.