Market Drivers for August 29th, 2013
USD/JPY runs through 98.00 on stop run
Euro gives up 1.3300 as fears of imminent Syria strike recede
Nikkei .91% Europe .25%
Oil $109/bbl
Gold $1408/oz.

Europe and Asia:
AUD Capex 4.0% vs. 0.5%
EUR German unemployment change 7K vs -5K
EUR Retail PMI 50.3 vs. 49.5

North America:
USD GDP 8:30
USD Unemployment Claims

Dollar gained some ground today against both the yen and the euro as the imminent threat of a military strike on Syria began to recede. With lawmakers in both US and UK starting to debate the proper response, it has become clear to the markets that any immediate and unilateral action by US is unlikely resulting in a relief rally for the buck.

The dollar broke through the 98.00 level against the yen with the pair running to a high of 98.24 in morning European trade and also rose against the euro. EUR/USD which has been trapped in a 1.3300-1.3450 range for the better part of the past week finally gave way to the downside falling to a low of 1.3253.

There is a reported 500M option barrier at the 1.3250 level that may keep the pair propped up until the NY cut, but momentum clearly is to the downside and traders are likely to want to take another run at that number to test the support below.

The euro also saw no help on the economic front where German unemployment rose by 7K versus -5K eyed. This was the first rise in joblessness in three months suggesting that growth in EZ largest economy may be slowing. The rise in unemployment also comes at an awkward time for Angela Merkel who is facing an election in early September and will now have to defend her policies.

The one high beta currency that has held its ground relatively well was the pound on rumors that Vodafone may be in negotiations to sell its 45% stake in Verizon. The deal is reported to be worth up 130B and is pound positive. EUR/GBP slid to 8550 and drop to 8500 if the news is confirmed.

With both UK and US legislators continuing to debate the Syrian situation it appears that a response may be delayed and may not occur without UN support. President Obama’s rhetoric has been decidedly more sober over the past 24 hours and Prime Minister Cameron has yet to receive Parliamentary support.

Therefore with geopolitical response at a standstill the markets may turn their focus back to economics. With US GDP and weekly jobless claims on the calendar, the greenback may get another boost if he data surprises to the upside with USD/JPY targeting 98.50 and EUR/USD testing the 1.3250 support as the day proceeds.

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