Equities Mixed ahead of Heavy Weight Data, But Swissy and Yen Can't Wait

Swiss Franc and Japanese yen continued to dominate the markets in US session on safe haven flows. Stocks were mixed and received little support from solid data from US and DOW hovered in tight range around 10000 level, and closed up 5pts. Crude oil, on the other hand, dropped sharply by nearly -4% to below 72. While sentiments were clearly pessimistic, bears were holding their bets before heavy weight data from US later this week, including ISM indices and Non-farm payrolls. Though, Swissy continued to make record high against Euro while yen also breached recent high against Sterling and Kiwi.

FOMC minutes released today revealed that Fed would consider going beyond a modest program to boost the economy but only if "the outlook were to weaken appreciably further." Also, "a few members worried that reinvesting principal from agency debt and MBS in Treasury securities could send an inappropriate signal to investors about the Committee’s readiness to resume large-scale asset purchases." While current preference was to buy Treasury debts, Fed left the door open to other options. Though the minutes didn't spell out what are the exact new steps that might be taken. Data from US saw conference board consumer confidence improved much more than expected to 53.5 in August. Chicago S&P Case Shiller 20 cities house price slowed less than expected to 4.2% yoy in June. Though, Chicago PMI dropped to 56.7 in August.

Other data released today saw Canadian GDP rose 0.2% mom in June, inline with expectations. Swiss UBS consumption indicator rose to two year high of 1.86. Eurozone unemployment rate was unchanged at 10% in July. Flash CPI dropped to 1.6% yoy in August. German unemployment dropped slightly less than expected by -17k in August while unemployment rate was unchanged at 7.6%. UK Gfk consumer confidence improved more than expected to -18 in August. Japan industrial production rose 0.3% mom, 14.8% yoy in July, retail sales rose 3.9% yoy in July, housing starts rose 4.3% yoy but PMI manufacturing dropped to 50.1 in August. Australian building approvals snapped a three month losing streak and rose 2.3% mom in July. retail sales rose more than expected by 0.7%.

NZD/JPY's break of 58.49 today suggests that last week's recovery was over and whole fall from 69.32 is resuming. We'd expect further decline towards 61.8% retracement of 44.19 (09 low) to 69.70 (09 high) at 53.93 next. Break of 61.25 resistance is needed to signal short term bottoming. Otherwise, outlook will remain bearish.