Yen Strengthens on Non-Intervention Talk, US Data Mixed

USD/JPY - Yen Strengthens to Seven-Month High

We start today with a look at the Yen, which strengthened in today's trading against its rivals. The Dollar-Yen pair, after rising to a level of resistance yesterday, slid almost 200 pips from there. The pair fell below the 90 level for the first time in seven months. The catalyst for the Yen gains was comments from the Japanese Finance Minister that the government there was not interested in intervention in the currency markets. It signals a shift away from the desire of Japan to have a weak currency which benefits exports.

GBP/JPY - Pound Extends Losses to Yen, Sharp Sellout Last Two Sessions

The Pound-Yen pair saw a dramatic slide in today's trading falling 380 pips from its open and extended the two day losses in the pair to almost 650 pips. The UK central bank seems unconcerned by the weakness in the Pound, and Bank of England Governor Mervyn King even mentioned yesterday that a weak Pound would be good for the economy. Traders, already nervous about an expansion of the quantitative easing measures by the UK central bank, punished the Pound as a result.

GBP/USD - Pound Moves Below 1.60 to End Week

Against the Dollar the Pound slid slightly further today, finding support near 1.5920. Today's decline extended the Pound weakness we saw yesterday. The Pound gave up all of its gains from the first half of the week, and will finish the week down about 300 pips lower than where it started.

US - Durable Goods Slide 2.4%

In fundamental news, the US had three important releases. First, durable goods orders declined 2.4% in August, a figure that surprised forecasts on the downside and was the biggest slide in orders in seven months. The data could temper some of the expectations around the manufacturing sector.

US - New Home Sales Rise Less Than Expected

New home sales rose 0.7% to an annual pace of 429K units, as the previous month's figure was revised lower to show a 426K annual pace. It then is the fifth straight month that new home sales have increased, but the figure missed forecasts, and will be seen as a weak report.

US - UMich Consumer Confidence Surges in September

A third release was more positive, with the final version of the UMich consumer sentiment rising to 73.5 from 65.7 in august. That is the highest level since the start of 2008, and came on both an increase in current conditions and future expectations. The report indicates consumers see that the recovery has begun, but that their own finances would remain problematic for some time.

EUR/USD - Euro Finds Support at 1.4610

The Euro-Dollar pair broke two sessions of declines, rising slightly in today's trading. The Euro was higher overnight setting a high near 1.4725, dipped following the US durable goods data and then retested its intra-day high after the better-than-expected consumer confidence release. Late NY trading saw the Euro fall again. Today's support matched the low from the beginning of the week.

Key Releases Next Week

The key releases to look for next week include the Tankan manufacturing survey from Japan, manufacturing sector PMI's from the UK and US, and Friday's US nonfarm payroll release.

Capital Market Services, L.L.C.
www.cmsfx.com

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