THE still-fragile state of financial market nerves was underlined once again in overnight trading, when Wall Street tumbled anew following the release of weakerthan-expected US housing and jobs numbers. Traders reported that Wall Street's key stock indices suffered a one per cent relapse - and riskier currency trades were again curbed - after news that pending US home sales for July had tumbled 12.2 per cent month on month.
This was its worst showing in six years compared with forecasts centred on a more modest 2 per cent dip. And to make the situation potentially worse, the US private-sector ADP jobs report for August released on Wednesday evening - ahead of this evening's official number from the US Bureau of Labor Statistics (BLS) - gave little to cheer about either.
The ADP's 38,000 increase compared poorly with more optimistic forecasts closer to 80,000-100,000 which we have seen - and were seen by some as a warning that forecasts for a BLS outcome of between 115,000 and 125,000 jobs later tonight might also be a little high.
The currency response was quick to follow - favouring in particular safe-refuge favourites but punishing the New Zealand dollar most painfully as far as the carry trade was concerned. Closer to home, most Asian units - with the notable exceptions of the Chinese and Indian currencies - seemed more inclined to tread water as risk aversion moves resurfaced to limit gains.
The US dollar was pressed down to a fresh post-depeg low of 7.5372 yuan yesterday before ending 0.2 per cent worse off from Wednesday at 7.5384 yuan, and also closed 0.3 per cent worse off at 40.79 rupees. At home, the greenback finished a shade worse off at S$1.5257. However, traders did report a noticeable pull-back on the currency side by the Asian close - ahead of the all-important US jobs stats for August later this evening.
Down Under, the New Zealand dollar managed to trim most of its chunky losses by the Asian close. The Australian dollar also recovered strongly over the course of the day after news that a stronger-than-expected 32,000 new jobs had been created at home for August - at least a third more than most of the forecasts we have sighted. Against morning lows of 68.37 US cents and 78.55 yen, the New Zealand dollar eventually fought its way back to end the day just a touch worse off from Wednesday - at 69.31 US cents and half a per cent weaker at 80 yen. The Australian dollar closed an even more impressive 0.7 per cent stronger at 82.71 US cents and 0.6 per cent better off at S$1.2622.
Aside from such carry-trade favourites Down Under, others which benefited most yesterday were safe-refuge European units. The unwinding of cross trades, meanwhile, pressed the US unit down to a morning low of 114.79 yen before it recovered to end the day with a net overnight loss of 0.4 per cent at 115.42 yen.
Further afield, it eventually closed the Asian session 0.4 and 0.7 per cent worse off at 115.42 yen and 1.2045 Swiss francs as well - while the euro and British pound scored gains of 0.5 and 0.8 per cent to US$1.3655 and US$2.0250 respectively.
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