Forex Markets Pare Gains

Markets Pare Gains- Haven Flows by Michael Boutros

Asia Pacific markets were softer after yesterday's global equity rally saw the Dow, the S&P, and Nasdaq advance by .6%, .5%, and .1% respectively. Risk appetite improved after the Reserve Bank of Australia gave an upbeat economic outlook for the region, providing support for commodity backed currencies. Market sentiment quickly shifted after June ISM non-manufacturing data showed that the US service sector had expanded at a slower pace than expected, falling to a four-month low with a reading of 53.8. More notably, the employment component came in at 49.7, showing a slight contraction in the jobs market. Note, that any reading above 50, signifies expansion, while a reading below would suggest contraction. The data fueled ongoing concerns that the global recovery may be faltering, subduing risk appetite in the Asian session, with the Hang Seng index, the Nekkei 225, and the S&P/ASX 200 index falling by 1.1%, .6%, and .5% respectively.

Commodities were generally softer, with gold easing to $1190, and crude oil dipping back below $72 per barrel, after peaking yesterday at $73.70. The dollar index was firmer after briefly falling below the 84 handle. The greenback was trading at 84.30, early in European trade.