Market Update - 17 August 2012

Data in the US seemed to lead risk markets higher overnight. First initial jobless claims printed 366k, which is towards the lower end of the 350-400k range we’ve seen in 2012.

Housing starts softened marginally to 746k from 760k but building permits jumped to 812k from 755k last week, which is the first print over 800 since mid 2008 and the series continues to show a modest but consistent uptrend.

Finally the Philly Fed manufacturing index bounced from -12.9 to -7.1, not as much as expected but at least it’s heading in the right direction.

USDMYR opened at 3.1250 again, it seems the positive sentiment from NY did not seem to carry forward to the Asian markets today, as usual tight range trade, even more so for today as most are away for Raya holidays, range expected to be at 3.1000-3.1500

Angela Merkel was also speaking on a state visit to Canada and the markets latched on to a quote that appeared to support Mario Draghi’s vow to save the Euro at all costs. The Euro rose 65pts to close 1.2355.

Elsewhere in Europe equities posted solid gains, the Stoxx 50 index rose 1.08% led by Spain     (+4.05%). Spanish yields fell 11bps on the 10yr while German and French bonds were also slightly stronger.

Stocks had been slipping until midnight here and treasuries were stronger but once the US data was out an afternoon rally ensued. The S&P closed 0.71% higher and the DOW was up 0.65% led by tech stocks after CISCO Systems rose 10% on the back of a 56% jump in profits.

Treasuries slipped with yields up 2bps to 1.835 while oil and gold both posted solid gains, up 0.92% and 0.75% respectively as the US dollar was weaker everywhere except Japan, USDJPY up 35pts to 79.35.