Morning Meeting 30/08/12

The Beige Book reported that activity expanded gradually in July and early August across most US regions and sectors, compared to the previous assessment of “modest to moderate”. Most districts reported employment holding steady or growing only slightly.There were areas of strength in the US economy, most districts reported increasing retail activity, particularly auto sales, and all 12 districts reported increases in either home sales, home prices or housing construction. The report reflects information collected on or before August 20, undermining investors belief in a move as soon as tomorrow; when Chairman Ben Bernanke will speak at the much-awaited Jackson Hole central bankers' meeting.

Buoyant reading in US contrasted with weaker retail numbers in Japan. Data showed overall retail sales turned negative in July with a 0.8% drop from a year earlier, the first such fall since November. Sales for the large retailers plunged 4.4%, accelerating a recent downward trend. The results for overall retail sales compared to a tepid 0.2% seasonally adjusted rise in June, after sharp gains of 3.6% and 5.7% in May and April, respectively. Large retailers have also been on a deteriorating path, with their sales falling 2.6% year-on-year in June, down 0.8% in May, and 0.6% lower in April.(Marketwatch reports). As a result the Nikkei fell 1.05% to 8,974.37.

South Korea's Kospi declined 1.37% to 1,901.95 as business confidence among the country's manufacturers stood near the lowest level since the global financial crisis kicked in, maintaining pressure for an interest rate cut to support growth.

Honk Kong's Hang Seng dropped 1.33% to 19,525.64, while the Shanghai Composite fell 0.34% to 2,046.16, declining at three and a half year low today. Reuters reported that:  despite sounding out primary dealers on potential demand for 28-day reverse repurchase agreements on Wednesday, China's central bank on Thursday opted against using the unconventional money market tool, widely seen as a compromise between short-term liquidity injections and a cut in bank reserve requirement ratios, showing that the Chinese central bank is running out of ammos.

US crude oil fell 0.5 percent to $95.05 a barrel, after slipping the previous day as Gulf Coast refineries and platforms seemed to have escaped damage from Hurricane Isaac. Brent eased 0.1 percent to $112.41

The common currency firmed 0.06 percent to $1.2539 and heald steady against the yen at 98.55. The currency options market suggested players were not expecting sharp price swings, with one-month euro/dollar volatility still below 10 percent.

Today, Italy will issue 6.5 billion euro longer-dated bonds. Italian government bond yields fell on Wednesday as dealers sensed good demand for Thursday's issuance after two successful auctions earlier this week. It will be the first auction of long term debt since the famous ECB's Draghi speech.

With Jackson Hole around the corner investors will be on the sideline waiting for Bernanke to delivery his speech, it's the last roulette spin before the ball eventually loses momentum and falls into one of 2 pockets on the wheel, QE3 or not QE3 this is the  question..

Have a great day.

Originally posted at www.77sigmatrading.com