GBP Highest As EUR Strong With JPY, CAD Off

against all rivals through the European session with GBP/USD testing US$ 1.5629, EUR/GBP weaker to £0.8540, GBP/JPY rallying to ¥154.65, and GBP/AUD higher to US$ 1.7382. Cable reclaimed the $1.56 handle one day after dovish comments from BoE MPC rate-setter Weale helped to knock GBP lower as Weale indicated additional QE asset purchases may be required. Weale is normally seen as hawkish, has voted against additional asset purchases, and voted against the recently unveiled unemployment rate threshold of 7%. Today’s U.K. data saw Q2 GDP better forecasts at +0.7% q/q and +1.5% y/y, with exports up a whopping 3.6%, government spending up 0.9%, private consumption marginally higher at +0.4%, and total business investment at +0.9% q/q. Other data saw BBA July loans for house purchases scaled back.

The Japanese yen was mixed across the board through the European session with USD/JPY higher to ¥99.13, EUR/JPY stronger to ¥132.33, and CAD/JPY lower to ¥93.72. There were no major Japanese economic data released today and the yen took some cues from the Nikkei 225 cash index which found good support above the ¥13700 level. This week’s disastrous July trade deficit data for Japan helped push the yen to its weakest showing since earlier this month. The Abe government and BoJ are expected to pursue a weaker yen more vigilantly over the coming weeks.

The Euro was mostly stronger across the board through the European session with EUR/USD testing US$ 1.3367, EUR/CHF better to CHF 1.2347, and EUR/AUD stronger to A$ 1.4851. Hawkish comments were made by ECB’s Nowotny who indicated positive economic news has “removed” the need for a rate cut along with the ECB’s “steady hand” strategy, adding he is “cautiously optimistic” about the Eurozone economy. Nowotny said it is premature to know if Greece will require more bailout concessions while Germany’s Schaeuble added Greek aid may be considerably lower than in the past. Policymakers this week noted additional Greek assistance is not expected before 2014. The recent string of positive German data was extended today with Q2 GDP at +0.9% y/y on a +1.9% growth in capital investment and a +2.2% climb in exports. The ECB will announce a 3-year LTRO repayment today and Eurozone August consumer confidence is due later.

The Canadian Dollar was lower against all rival pairs through the European session with USD/CAD higher to C$ 1.0555, EUR/CAD stronger to C$ 1.4087, GBP/CAD better to C$ 1.6490, and AUD/CAD bid to C$ 0.9520. C$ has been the broadest underperformer lately with yesterday’s June retail sales print of -0.6% m/m below expectations. Data due today include July consumer price inflation numbers with a headline print around +1.5% y/y expected.

The Australian Dollar was mixed across the board through the European session as AUD/USD sank to US$ 0.8983 and AUD/NZD improved to NZ$ 1.1539. There were no major Australian economic data released today and Aussie instead took some cues from Chinese news with China Ministry of Commerce’s Shen calling for a “stable yuan” and “continued (economic) growth with higher foreign demand,” noting August trade growth is “likely” and adding Chinese industrial growth may reach 9% in H2 2013. Chinese economist Liu Yuhui warned of Chinese liquidity problems in H2 2013. Data released in China overnight saw July foreign direct investment climb 24.1% y/y, above expectations and above the prior 20.1% y/y gain.

Gold and Silver traded sideways through the European session as Gold reached $1379.25 and was supported around $1371.76 while Silver tested $23.24 and found support around $22.887. Metals prices may continue to follow expectations regarding the Fed’s possible QE taper expected as early as next month, especially after the FOMC meeting minutes released this week noted policymakers are “broadly comfortable” in reducing asset purchases if economic data are supportive. Holdings in Gold exchange-traded products (ETPs) fell 1 metric ton yesterday to about 1,947.3 tons. Asian physical demand continues to surge and portfolio liquidation may have reached its worst point. Output curbs are expected at major producers including Barrick Gold, the world’s largest producer. Platinum is poised to notch its seventh consecutive weekly gain, the best streak since May 2006.

Crude Oil backed away from intraday strength as Brent futures tested $109.98 and found support around $109.32 while WTI futures reached $105.14 and traded at an intraday low of $104.52. Libya announced it will resume oil exports from Brega, one of its four ports where it this week declared force majeure. Libyan exports are currently running at 500,000 barrels per day. Iranian Oil Minister Zanganeh reported he plans to expand his country’s oil production to pre-2005 levels, noting “those who have replaced us in the world’s oil markets (need) to know that when we are reentering these markets they will have to accept that oil prices decline or they should reduce their production to create enough space for Iran’s oil.” Oil Movements reported OPEC will reduce oil shipments through early September by about 320,000 daily barrels to 23.6 million barrels per day.