Calmer markets prevail today, though unease lingers, and market movements remain sharp, albeit less dramatic. In these somewhat less volatile conditions, the US dollar is performing better, showing strength against all G10 currencies. The yen and sterling are the weakest, each nursing losses of 0.4%-0.5%. Gold is fluctuating around the $2400 level in quiet trading. September WTI is relatively stable near $72.30, after testing the $74.50 area earlier, slightly above yesterday's high.

Asia Pacific Markets
Two macroeconomic highlights stand out in the Asia Pacific region today. First, Japanese nominal labor earnings are on the rise and have increased even when adjusted for inflation. However, household consumption remains weak. Second, the Reserve Bank of Australia (RBA) left its policy unchanged and pushed back against speculation of an imminent rate cut.
The dollar bottomed out during Asia Pacific trading yesterday near JPY141.70, about three standard deviations below the 20-day moving average, and recovered to nearly JPY144.50 in the North American session. The pre-weekend low, following the disappointing US employment report, was around JPY146.40, a level the dollar nearly reached in early Asia Pacific trading today before pulling back.
The RBA's hawkish stance saw the Australian dollar rise to $0.6540, but new sellers pushed it back below $0.6500.

European Markets
Financial instability has prompted the market to anticipate more aggressive easing by the European Central Bank (ECB). The swaps market is pricing in a quarter-point cut next month. Calmer markets today have seen the expected cuts for this year scaled back to about 73 basis points from 85 basis points yesterday.
As capital markets stabilized, the euro pulled back to around $1.0945.
Sterling spent yesterday's volatile session within the range set on Friday, turning back from $1.28 today and settling near $1.27 in late European morning trading.

American Markets
With Q2 GDP already reported, the June US trade balance was unlikely to be a significant mover, even though it may impact revisions. Given the current financial market instability, this is doubly true. Speculation continues about an emergency Fed rate cut, but at this juncture, it does not appear to be the most likely scenario.