Despite undeniably improving fundamental data, investors continue to question the sustainability of the recovery. In the week, volatility spiked higher, taking the VIX close to 30 before easing, while currency liquidity remained thin, most ranges held, and gold spiked to close at US$993.65.

The RBA left rates at 3.0% and issued a cautious statement, as 2Q2009 GDP printed 0.6% q/q, 0.6% y/y. August TD Securities inflation estimate weakened to 1.7% y/y, 2Q2009 company operating profits fell −7.8% q/q, and July private sector credit slowed to 3.0% y/y. August PMI improved to 51.7 manufacturing, 48.0 services. 2Q2009 current account balance printed a deficit of AU$13,347Mn, the July trade balance a deficit of AU$1156Mn. AUD/USD surged above resistance at 0.8450 on the gold-bug spike after falling earlier, closing at 0.8507.

U.S. August unemployment jumped to 9.7% as the economy lost −216K jobs and the previous months’ losses were revised higher by nearly 50K; last week’s initial jobless claims printed 570K. August PMIs printed 52.9 manufacturing, 48.4 services. July pending home sales 3.2% m/m, 12.9% y/y, and factory orders 1.3% m/m.

The ECB left rates at 1.0%, as expected, with a surprisingly dovish statement, and the second estimate of 2Q2009 GDP printed −0.1% q/q, −4.7% y/y, with household consumption rising 0.2% q/q and gross fixed capital falling −1.3% q/q. July unemployment rose to 9.5%, as retail sales fell −0.2% m/m, −1.8% y/y. Final readings of August PMIs improved to 48.2 manufacturing, 49.9 services, and 50.4 composite. EUR/USD consolidated within the lower half of its regression channel, trading flat for the week and closing at 1.4303.

The BoE meets Thursday, 10 September, and is expected to hold their QE and rates steady, the latter at 0.5%. August PMIs printed 49.7 manufacturing, 47.7 construction, and 54.1 services. July M4 money supply rose 1.5% m/m, 14.5% y/y. USD/GBP wavered above and below the 1.6200 level before rising on risk and closing at 1.6396. EUR/GBP sank to close at 0.8721.

The BoC meets Thursday, as well, and is expected to honour their commitment to leave rates unchanged at 0.25%. June GDP rose 0.1% m/m, however the 2Q2009 reading fell −3.4% annualised. August created 27.1K jobs, mainly part-time, as the unemployment rate rose to 8.7% and the Ivey PMI surged to 55.7. USD/CAD continued rangebound between 1.1080 and 1.0750, closing at 1.0868. AUD/CAD surged through 0.9200, closing at 0.9246 in commodities-driven trading.

The RBNZ also meets Thursday, and is expected to leave rates unchanged at 2.5%. August business confidence improved to 34.2 from 18.7. NZD/USD also consolidated, closing little changed at 0.6872. AUD/NZD could not force through the MA-200 on four-hour charts, riding it as resistance to close at 1.2373.

Japan’s August manufacturing PMI improved to 53.6 as July industrial production printed 1.9% m/m, −22.9% y/y. 2Q2009 capital spending fell −21.7% y/y, −22.2% ex-software, and July housing starts down −32.1% y/y. July retail trade printed 0.4% m/m, −2.5% y/y, as labor cash earnings fell −4.8% y/y. The yen had a volatile week, with USD/JPY falling as low as 91.94 before closing at 93.00. EUR/JPY and AUD/JPY also sank early before surging at the close, to 133.03 and 79.12, respectively.