Stocks lack direction; Profit-taking knocks down USD

Forex: The USD came under pressure in thin Asian trading, but few traders are taking the move seriously. Traders cited profit taking flows for the greenback's weakness (stop-loss bids were triggered in the EUR), while others pointed out that there is a Tom DeMark technical signal on the USD index suggesting a top is forming. EUR/USD bias remains to the downside, but it's worth pointing out that stops below 1.4570 remained intact during the U.S. session. Traders also talked of official support for the EUR. USD/KRW remains in focus, with South Korean forex authorities once again selling USD to provide support to the faltering KRW.

Australia's construction work done declines more than expected during Q2: (AU Q2 CONSTRUCTION WORK DONE: -2.6% V 1.5% expected, prior revised to 5.0% from 2.3%) Analysts said the fall in the volume of construction work done will be a drag on overall economic growth in the June quarter, but they also pointed out that the annual growth rate in construction was a solid 5.9% y/y. Overall, today's data is consistent with the view that Australia's economy is weakening and that interest rates are likely to fall over coming months.

New Zealand business confidence improves in August: (NZ AUG NBNZ BUSINESS CONFIDENCE: -20.5 V -43.2 prior; Business Activity Index: 4.7 v -8.2 prior; A net of 36% of companies expect to raise prices and 16% expect profits to decline) A weaker currency, lower oil prices and falling interest rates boosted New Zealand business confidence in August, the National Bank of New Zealand's survey showed. Inflation expectations for the year ahead rose to 3.79% from 3.67% in the previous month's survey.

Equities: At 23:56 EDT Japan's Nikkei is -0.38%, the S&P/ASX200 is -0.17%, South Korea's KOSPI is -0.09%, Hong Kong's Hang Seng index is 0.66%, and the Shanghai composite index is -1.27%. The S&P500 futures contract gained 0.02%, last trading at 1,271.90. It was a listless session in Tokyo, with Wall Street's mixed session failing to provide direction to Japanese investors. Automakers and property developers generally traded lower, but their losses were tempered by gains in the energy sector. Australia's benchmark index, the S&P/ASX200, had a choppy session, as gains in energy companies were offset by declines in financials. South Korea's KOSPI index recovered some early losses, but foreign investors continue to look for ways to exit the market. Chinese equities remain under pressure, with investor confusion about policy reaction limiting the impetus for bargain hunting. Hong Kong's Hang Seng index made some early gains, but upside looks limited, with banks and oil companies leading most of the upside.

Commodities: Nymex crude oil gained 0.65% between 18:00 EDT and 23:56 EDT, last trading at $117.02/bbl. In its most recent update, the National Hurricane Center downgraded Gustav to a tropical storm, but noted that the storm could regain hurricane strength on Wednesday. Spot gold gained 0.74%, last trading at $834.20/oz.