The NY session was an absolute chop-fest but the USD was once again the proverbial whipping boy. US equities slipped a modest -0.3% after testing multiple times into positive terrain. It was surprising that stocks did not give up more ground in the face of more bad news on the economic front. The most forward looking release of the session, Chicago PMI, showed some worrying details. Indeed, it looks like it is back to reality after the cash for clunkers government bailout.

The September Chicago PMI report showed a significant giveback from the robust August data. New orders fell to 46.3 from 52.5 while production slowed to 47.2 from 52.9 on the month. Employment remained sluggish at 38.8 and up a smidge from 38.7 last month. Inventories rose to 38.9 from 27.5 †which is bad considering an extremely poor demand environment. The report is sobering and supports the notion that the short-term blip in the data from the government handout is unsustainable. This bodes well for the US dollar medium-term and bad for risky assets.

Intervention reared its ugly head in NY trading with the SNB coming into the market to sell CHF in an effort to support its economy. EUR/CHF opened near 1.5080 and promptly shot up to a 1.5240 session high on the back of the bank's action. USD/CHF saw an even more pronounced move from 1.0290 to 1.0450 in that span. The fact that more of the intervention was done via USD buying, elicited a 1.4655 to 1.4584 move down in EUR/USD. The pair eventually recovered from the SNB blitz and closed near 1.4630/40 †actually following stocks rather closely all session.

The overall offered tone to the buck saw gold extend higher. The precious metal jumped to a session high by 1009 after falling towards the 995 zone on the back of the short-lived USD strength. The next major resistance level looks to be a daily down-trendline at 1014/1015. Break above there should elicit more short-term upside towards 1020/1025.