The Australian Dollar / Japanese Yen currency pair traded down overnight after reports showed Australian housing prices significantly weakened and Japanese cut its assessment of its domestic economy. This caused a repatriation of the Yen as traders went into a “risk off” mood and unwound carry trades. However, as of now the pair has rebounded and the US dollar is weaker against all major currencies. European equities remain in negative territory however, and S&P 500 futures are 3 points lower.
The latest round of data out of Spain is again dismal: the economy contracted 0.4% Q/Q and contracted 1.3% Y/Y. Additionally private-sector bank deposits in Spain fell from 1.583 trillion Euros to 1.509 trillion, a nearly 5% decline. This shows that people are rapidly losing faith in Spain’s financial system despite a 100 billion Euro bank bailout fund and Draghi’s promise to bail out the country should they ask. The only good news out of Europe this morning was that the rapid outflows of capital out of Greek banks slowed in July, likely due to the results of the country’s June elections.
This morning in the US the S&P Case Shiller Home Price Index was released and came in stronger than expected at 0.5% versus 0.4 expected and 0.9% last month. Later today consumer confidence numbers will be released, with expectations for a moderate decline from 65.9 to 65.8. NYSE volume continues to make new yearly lows as the market looks forward to news from the Federal Reserve on Friday. Today Mario Draghi, expected to speak in Jackson Hole on Saturday, announced he will no longer be attending the event, citing a heavy workload.