Intraday Market Thoughts

Euro Loses 1.36 Footing, NZD Holds Despite Fitch Downgrade

by Adam Button
Sep 30, 2011 1:56

Euro loses footing below 1.36, the large decline in US jobless claims was attributed to seasonal adjustments. EUR and CHF led while NZD fell badly after Fitch lowered its credit rating due to external debt. A raft of Japanese data has been released. Ashraf's PREMIUM INSIGHTS will be due at about 22:00 EST, 02:00 GMT. HEADS-UP for China's FINAL September manufacturing PMI due later this morning.

US trading began and ended on a positive note but there was a large swoon mid-session. The initial optimism came after jobless claims fell to 391K from 428K and US Q2 GDP was revised to 1.3% from 1.0%.

This, combined with the positive vote in Germany, boosted risk trades to session highs. Sentiment began to reverse after a Labor Department official said the big drop in jobless claims was due to technical issues and seasonal adjustment volatility, not economic factors. The sentiment was further eroded after Reuters said US authorities are probing accounting irregularities at US-listed Chinese companies.

Most trades later rebounded on quarter-end buying but the NZD took a fresh leg lower after Fitch cut its FX issuer default rating to AA from AA+. Despite the losses, NZD was able to hold above last weeks low of 0.7636. The kiwi rebounded somewhat when Moodys affirmed the Aaa rating for the island nation.

Asia-Pacific Review

Japans manufacturing PMI for September fell to 49.3 from 51.9. Japans unemployment rate unexpectedly fell to 4.3% in August from 4.7% (exp was 4.7%). Japans national CPI held at 0.2% y/y in August, while Tokyos annual CPI fell -0.2% again in September. Japans preliminary industrial production rose 0.8% m/m in August from 0.4%, less than the expected 1.5%. New Zealands NBNZ business confidence survey fell to 30.3 in Sep from 34.4.

China's FINAL September manufacturing PMI due at 22:30 EST (4:30 GMT) after the flash (preliminary) figure remained below 50 for the 3rd straight time, at 49.9


Latest IMTs