Overnight, Japanese Vice Finance Minister Nakao was quoted as stating: "If needed we will take very decisive action in the market, that is our stance.” The yen remains stubbornly strong in the face of another QE3. Since 2003, Japan has a long history of threats of intervention. It also has a long history of acting on those threats. USDJPY largely shrugged this off, and is still trading around the 78.50 handle.
Some very interesting developments came on the data front this morning as US second-quarter GDP was revised up to 1.7% from 1.5%. The figure is not amazing, and is in fact still down from the 2% posted in the first quarter of 2012, but it nonetheless highlights that things are not all terrible within the world’s largest economy. Growth has been stubbornly slow, but it is still there, and ultimately the country is faring much better than its European counterparts. Some have argued that the case must be pretty strong for Bernanke to announce QE3, as both the financial and political costs are starting to mount. We will have to wait until Friday to find out if this recent bright spot in economic data will have any effect on future US monetary policy.
In the meantime, Hurricane Isaac has made landfall with less destruction than anticipated, which has caused oil to shed some value, trading just above $95 at the time of writing.
And finally, US pending home sales are out at 10:00am EST this morning, which should continue to show a slow and minimal improvement as the US housing market continues to pull itself out of its hole four years on.
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