CHF Flies High, GBP Robust While USD And AUD Sink; Metals Rally Hard

during the North American session as EUR/USD reached US$ 1.3353, USD/JPY sank to ¥97.23, GBP/USD raced to US$ 1.5650, and USD/CHF tumbled to CHF 0.9246. A sharp sell-off in U.S. equity markets with the Dow off more than 200 points intraday added to its woes, as did an increase in the 10-year Note yield to 2.775%, its highest level since August 2011.

U.S. economic numbers turned in a mixed performance with July headline CPI printing at +0.2% m/m and +2.0% y/y and the core rate up marginally at +1.7% y/y. Weekly jobless claims moderated to +320,000 and continuing claims settled lower at +2.969 million. July industrial production was a weak miss at 0.0% and July capacity utilisation edged lower to 77.6%. Also, the August NAHB housing market index popped higher to +58 while the August Philadelphia Fed index fell sharply to 9.3. St. Louis Fed’s Bullard said the Fed’s taper in September will be “data dependent” and called the spike in 10-year rates a “concern.” The Fed’s balance sheet reached an all-time high at US$ 3.585 trillion. July building permits, July housing starts, and August U. of Michigan consumer sentiment round out the week tomorrow.

The Swiss franc was the main winner through the North American session as EUR/CHF traded as low as CHF 1.2336, CHF/JPY tested ¥105.37, and AUD/CHF sank to CHF 0.8448. Major intraday strength in the metals complex pushed CHF higher, as did some traders reducing EUR exposure after Germany’s Merkel predicted very close election results in her re-election bid on 22 September.

The British pound rallied hard through the North American session with EUR/GBP slumping to £0.8504, GBP/JPY escalating to ¥153.22, and GBP/AUD sharply bid at A$ 1.7145. Sterling was supported by much stronger July retail sales of +1.1% m/m and +3.1% y/y, leading to speculation that the U.K.’s lofty inflation rate could gain further ground and test the BoE’s new resolve to wait for a 7.0% print in unemployment.

Gold shone like its old self today, up more than US$ 30 and testing the US$ 1,370 level for the first time since 18 June. Ongoing market chatter than JPMorgan Chase is scrambling to cover a lot of metal for delivery pushed prices higher, as did the broadly weak U.S. Dollar and speculation the Fed may be reluctant to taper too much QE in September if 10-year Treasury yields are orbiting the 3.0% handle. Gold bulls shook off news that Paulson and Soros have liquidated major SPDR Gold Trust assets, along with a World Gold Council report that global demand shrank 12% in Q2 to a four-year low of 856.3 metric tons.