Gold sees bargain hunters after CME-prompted fall

Asian currency traders were content to sit back ahead of the Jackson Hole conference Friday, but there was some bargain hunting in gold following a drastic fall when the CME announced a 27% increase in margin requirements and Asian buying virtually dried up.

Otherwise a session devoid of data and with the Jackson Hole conference around the corner kept currency pairs in tight ranges though equities remained in the black despite the post-session sell-off on Wall St.

Things pick up in Europe Thursday with consumer confidence surveys from Germany and Sweden, the latter also releasing household lending, PPI and unemployment. We can also expect Switzerland’s ZEW survey and the CBI reported sales data while BOE’s Weale speaks late in the session. The US session concentrates on weekly jobless claims and Bloomberg consumer comfort index.

In the European and US sessions, slightly more volatility was seen with gold and GBP grabbing the spotlight. EUR was initially firmer, able to shrug off a disappointing IFO survey (expectations index at its lowest since December 2009) but failed to regain the 1.45 handle. GBP was beaten lower as investors weighed up a weak economy, the Bank of England adopting a more dovish stance and a large corporate sell order.

The USD was given a lift during the US session, with the index able to regain the 74.0 mark, as the Congressional Budget Office slashed its longer-term US deficit forecast by half. Better than expected US headline durable goods orders in July (+4.0% versus 2.0% expected and an upwardly- revised -1.3% previously) also helped sentiment towards the dollar and a scaling back of Bernanke expectations for tomorrow’s speech gave additional impetus. Wall St was encouraged by the better data and lower deficit forecast with the S&P rallying for the third day, but was dragged lower by Apple after the close as Steve Jobs announced his resignation. More favourable sentiment towards equities had put pressure on US Treasuries and yields edged higher accordingly.
 
Economic Data Highlights

• US MBA Mortgage Applications out at -2.4% vs. +4.1% prior
• US Jul. Durable Goods Orders out at +4.0% m/m vs. 2.0% expected and revised -1.3% prior
• US Jul. Durable Goods Ex-transportation out at +0.7% m/m vs. -0.5% expected and revised +0.6% prior
• US Jun. House Price Index out at +0.9% m/m vs. 0.2% expected and 0.4% prior
• NZ Q2 Retail Sales Ex-Inflation out at +0.9% q/q vs. 0.6% expected and revised 1.1% prior
• AU Q2 House Affordability Index out at 56.2 vs. revised 55.8 prior

Upcoming Economic Calendar Highlights
(All Times GMT) 

• GE Gfk Consumer Confidence ((0600)
• Sweden Consumer/manufacturing Confidence (0715)
• Sweden Economic Tendency Survey (0715)
• Sweden Household Lending (0730)
• Sweden PPI (0730)
• Sweden Unemployment Rate (0730)
• Swiss ZEW Survey (0900)
• UK CBI Reported Sales (1000)
• US Initial Jobless Claims (1230)
• US Bloomberg Consumer Comfort Index (1345)