Risk Rally Sees No Follow Through; JPY GDP Revised Lower

Markets consolidate; Japanese Q2 GDP revised lower; Chinese trade surplus rose; Eurozone investor confidence improved; German auction. Markets will seek hints about upcoming German court ruling and FOMC decision.

The impressive rally that markets saw after the weaker than expected NFP has seen no follow-through. EUR along with GBP are little changed while the rest of the majors are slightly lower against the buck. The only major currency that gained against the USD is CAD. European equities are just about unchanged.

The JPY has ignored a substantial revision lower of Japanese Q2 GDP and continues to trade little changed. The revision took the print from 1.4% to 0.7% q/q and on annual basis from 0.3% to 0.2%. The revision could increase the chance of further easing (the BOJ meets on 9/19) but the upcoming FOMC decision will be more important for JPY pairs. USDJPY trades around 78.30.

On the data front, Chinese trade surplus rose in August to USD 26.66 bln from July's USD 25.1 bln as annual exports rose 2.7% while imports declined by 2.6%. Eurozone sentix investor confidence improved in September to -23.5 from previous -30.3.

Germany sold 6 month bills totaling EUR 3.4 bln. The average yield rose to -0.0147% from -0.0499% and cover improved to 1.5 from 1.3.

Upcoming risk events include Greek PM Antonis Samaras' meeting with the Troika that returned to Athens on Friday which so far has been in "good climate". Tomorrow the PM meets the ECB president Draghi in Germany.

Markets will be searching for any clues regarding the German constitutional court ESM decision on Wednesday and the key FOMC decision on Thursday. The market expects the ESM and the fiscal compact to be upheld but there could be additional conditions on future bailouts that could limit the potential EURUSD gains.

There are no US reports due today.