AUD Strongest Across The Board, Euro Weak

across the board through the European session as AUD/USD gained to US$ 0.8977, EUR/AUD slumped to A$ 1.4808, and AUD/JPY rallied to ¥87.97. Aussie found a bid as there was a moderation in Syria-related geopolitical jitters, absent any overt U.S. military action yet and a call by the UN to not attack Syria for at least four days. Also, UK’s Cameron did not garner the support for Syria-related military action that he had hoped. A$ also climbed on a +4.0% increase in Q2 private capital expenditures, up from the prior -4.7% print. HIA July new home sales were off 4.7% m/m. PBoC today reported that China’s economic environment has been “extremely complex” in 2013.

The U.S. Dollar moved higher against most currencies through the European session as EUR/USD slumped to US$ 1.3252, USD/JPY gained to ¥98.26, GBP/USD weakened to US$ 1.5497, and USD/CHF appreciated to CHF 0.9284. US economic data due today will try to add to yesterday’s decent July pending home sales print of +8.6% y/y. Today’s numbers include Q2 GDP with an annualised 2.2% rate expected, weekly initial jobless claims, and Q2 core PCE. Fed speakers today include St. Louis’s Bullard and Richmond Fed’s Lacker. A strong GDP print could improve the chances of the Fed’s initial QE taper starting next month.

The Euro was quite weak through the European session as EUR/JPY fell to ¥129.97, EUR/GBP weakened to £0.8542, and EUR/CAD came off to C$ 1.3919. EUR was on the defensive after August German unemployment climbed +7,000, worse than expected, and the August unemployment rate remained steady at 6.8%. German August CPI data are expected later today and are forecast to print around +1.7%. EU’s Rehn today reported it is “premature” to state that Europe’s crisis is over.

The Swiss franc was pressured against most major peers through the European session as EUR/CHF reached CHF 1.2311, CHF/JPY fell to ¥105.63, and GBP/CHF climbed to CHF 1.4401. ECB rate-setter Nowotny today criticised the Swiss National Bank’s monetary policy, saying it is unconventional for central banks to intervene in the FX markets. The UBS July consumption indicator yesterday printed at an unchanged 1.41 and the August KOF leading indicator is due tomorrow and expected to come in around 1.32.

The Japanese yen was on the defensive against most currencies through the European session as GBP/JPY escalated to ¥152.39 and GBP/AUD climbed to A$ 1.7377. Bank of Japan Policy Board member Morimoto spoke overnight and said the Japanese economy and prices are adjusting as expected and said the central bank will “make adjustments” as required. Morimoto also reported Japan’s largest risk is the overseas economy and BoJ will continue to ease until there is “stable inflation.” Also, Morimoto said any hike in the sales tax will not prevent economic growth from reaching its potential. Today’s data saw July large retailers’ sales at -1.6%, down from the prior +3.5% print, with retail trade at -0.3% y/y. A massive ¥862 billion decline in foreign purchases of Japanese bonds was reported through 23 August, the third largest decline in 18 months. The Japanese media reported Japanese ministries have requested a record ¥99 trillion budget for the next fiscal year.

Gold and Silver extended yesterday’s selloff through the European session with Gold testing US$ 1404.75 after finding resistance around $1418.16 and Silver falling to US$ 23.66 and was capped at $24.394. The metals complex came off on news that U.K.’s Cameron retreated from asking lawmakers for immediate supporting regarding military intervention in Syria. Gold and Silver have recently gained ground on safe haven related flows and may take their cues from Syrian headline event risk.

Crude Oil was knocked lower through the European session as Brent futures fell to US$ 114.00 after running out of steam at $115.03 and WTI futures came off to US$ 108.28 and were capped at $109.35. Crude will likely continue to closely track developments in Syria and around the Gulf where the possibility of supply and transportation disruptions is significant. Yesterday’s weekly U.S. inventories data showed that crude stockpiles climbed the most in four months and WTI fell from its highest settlement level since May 2011. The U.S. and U.K. announced they may lead a strike against Syria even without UN support.