Risk continued to come off the boil as the trend of positive US data came to an abrupt end. The ADP employment report showed a loss of -298K private payrolls in August and this was well below market expectations. Meanwhile, factory orders rose a lower than anticipated 1.3% in July, with all of the increase coming from the recently bailed out transportation sector. Equities traded in choppy fashion all session and the S&P was sitting down -0.3% when the dust settled, failing on multiple attempts to recapture the 1000 mark. Bonds were better bid with the 10-year Treasury yield dropping 6 beeps to a 3.30% rate - in other words, bond prices rose.

Risk aversion did not help the buck and it looks like concern over the US economy's nascent recovery weighed on the currency. EUR/USD squeezed up to a 1.4294 session high and was only held back by the 100- and 200-hour smas which converged just above that level. Cable tested 1.6300 after opening 100 pips below that but scurried back down about 30 pips ahead of the close. In broad terms, the dollar fell about -0.4% on the day. If past is prescient, however, we look for the strong correlation between risk aversion and the USD to resume.

The commodities space was mixed. Gold soared more than $20 into the $980 zone as the precious metal continued to recoup its safe haven status. Another big daily trendline drawn from the March 2008 and February 2009 highs now lurks at $991.87 - keep this level in mind tomorrow. Oil traded sideways, heading down to test the waters below $67 as weekly stockpiles came in above expected. The commodity would eventually retrace back to a $68 high before settling just below there. This elicited some decent volatility in USD/CAD which traded between a 1.1007 low and a 1.1103 high all day before closing by 1.1050 here.

Upcoming Economic Data Releases (Asia Session) prior expected

9/3 1:30 GMT AU  Trade Balance  JUL  -441M  -880M 

9/3 3:00 GMT NZ  ANZ Commodity Price  AUG  1.00%  - -