JPY Weakens Against All Rivals, CAD Strong Across The Board

against all rivals through the European session as USD/JPY gained to ¥100.09, EUR/JPY climbed to ¥131.83, GBP/JPY reached ¥156.50, and CHF/JPY appreciated to ¥106.58. Traders dumped yen for higher-yielding carry currencies after Q2 GDP printed at +0.9% q/q, below expectations, with the annualised number at +3.8%, up from the prior reading of +2.6%. Consumer spending ticked lower to +0.7% and the Q2 GDP deflator weakened to -0.5% while Q2 business spending improved +1.3% q/q. Also, the July current account balance improved while the July trade balance worsened to -¥943.3 billion on a balance of payments basis. Moreover, August consumer confidence came in lighter at 43.0 and the August economy watchers survey slumped lower. August money supply numbers and minutes from the BoJ Policy Board’s August meeting are due tomorrow. Economy minister Amari called for higher sales taxes but said Japan will require additional stimulus. PM Abe is expected to approve a higher sales tax on 1 October. Moody’s warned Japan its credit rating could be damaged by Fukushima radiation problems.

The Australian Dollar was mostly stronger against most major rivals through the European session as AUD/USD climbed to US$ 0.9211, EUR/AUD came off to A$ 1.4292, and GBP/AUD rallied to A$ 1.7051. Tony Abbott and his centre-right coalition won the election, displacing Rudd and promising a more business-friendly government and an abolition of the mining tax. Fitch said Australia’s fiscal plans are intact following the elections and added a government surplus is expected by 2017. July new home loans moderated to +2.4% with the value of loans flat m/m and July investment lending improved to +2.9% while August ANZ job advertisements fell 2.0% m/m. September consumer inflation expectations and August NAB business conditions and confidence are due tomorrow. Many Chinese data released today saw the August trade balance improve to US$ 28.52 billion with exports up 7.2% y/y. Also, Chinese August CPI moderated to +2.6% y/y and August PPI ticked climbed to -1.6% y/y. Chinese August retail sales and August industrial production are due tomorrow.

The Canadian Dollar was strongest across the board through the European session as USD/CAD came off to C$ 1.0386, EUR/CAD fell to C$ 1.3685, CAD/JPY advanced to ¥96.10, and AUD/CAD weakened to C$ 0.9544. C$ is one of the best performing currencies month-to-date following weeks of underperformance. July building permits and August housing starts numbers are due tomorrow with July house prices numbers and capacity utilisation numbers expected later in the week.

The Swiss franc extended its recent sell-off against most currencies through the European session as USD/CHF gained to CHF 0.9391, EUR/CHF improved to CHF 1.2367, GBP/CHF rallied to CHF 1.4689, and AUD/CHF bettered to CHF 0.8643. Swiss data saw August unemployment remain steady at 3.0% while July retail sales moderated to +0.8% y/y from +2.3% y/y in June. SNB’s monetary policy decision is expected on 19 September. August producer and import prices numbers are expected on Friday. Canadian jobs numbers released on Friday saw 59,200 jobs added in August, outpacing expectations.

Gold and Silver weakened marginally through the European session as Gold came off to US$ 1384.87 and was capped at $1391.61 while Silver fell to US$ 23.661 and was capped at US$ 23.991. Speculative positions in Gold futures and options increased to their most bullish level since January, rising 3.6% to 101,396 for the week ending 3 September, according to CFTC data. Gold prices remain poised for the first annual decline since 2000 and holdings in global gold exchange-traded products are off 26% this year. Gold and Silver will likely take some cues from the US’s possible military action against Syria.

Crude Oil was off slightly through the European session as Brent futures weakened to US$ 114.04 and were capped at $114.50 while WTI futures slumped to US$ 109.02 and were capped at $109.60. US legislators return from their summer recess today and on tap is a possible vote in the House authorising military action against Syria. The Senate Foreign Relations Committee last week authorised the use of force against the Assad regime, but Obama’s prospects in the US are dimmer. CFTC data showed net long positions in crude oil declined 3.6% to 305,971 contracts through 3 September. The prospect of Russia providing military assistance to Syria if the US launches military action in that country could propel Brent crude higher on the premise of disruptions to Middle Eastern supply.