Forex Afternoon Wrap – 07/07

Jul 07, 12:40 pm
Forex Afternoon

Eurogroup meets as Greece re-negotiations start. Pound Sterling weakens -1%

Key Notes:

  • New Zealand NZIER Business confidence 5 vs. 23 previously
  • Australia AIG Construction index 46.4 vs. 47.8 previously
  • RBA leaves cash rate unchanged at 2%
  • Switzerland unemployment rate 3.3% vs. 3.3%
  • German industrial production m/m 0.0% vs. 0.1%
  • France trade balance -4bn vs. -3.3bn
  • Switzerland foreign currency reserves 516.2bn vs. 517.7bn
  • UK manufacturing production -0.6% vs. 0.1%; industrial production m/m 0.4% vs. -0.2%
  • Eurogroup meetings
  • Canada Trade balance -3.3bn vs. -2.6bn
  • US Trade balance -41.9bn vs. -42.5bn

Later:

  • NIESR GDP estimates
  • US JOLTS job openings
  • IBD/TIPP Economic optimism

The markets pretty much recovered most of the losses from yesterday and in comparison to the price action from the previous Monday when the markets opened after learning about Tispras calling for a referendum, the reaction was a whole lot subdued. The Asian session saw the RBA leaving interest rates unchanged and the monetary policy did not veer too much from the previous month’s statement. The Aussie which seemed stronger initially broke down off the previous lows near 0.7471 to post new intraday lows at 0.7425. The Kiwi, remained under pressure as the currency continued to weaken against the Greenback, posting new daily and yearly lows at 0.662.

The Japanese Yen was mostly choppy but stronger across the board. The USDJPY posted session lows to 122.331 with the Yen being subdued. But against other currencies such as the Pound Sterling and the Euro, the Yen was considerably stronger.

The European trading session saw German industrial production coming out flat for the month. The Euro was seen trading near 1.09275 lows, which forms a strong level of support. A break below this region could see the Euro plummet to fresh lows at 1.082. The Eurogroup summit kicked off today with Greece being discussed. It was apparently reported that Greece was given only a few hours time to approach the negotiating table with a new set of proposals. The ECB, after the Greek referendum has refused to raise the ELA ceiling and thus the Greek banks remain shut alongside capital controls still in place.

From the UK, the manufacturing production was weak, declining -0.6%, while industrial production managed to post modest growth figures of 0.4%. The Pound Sterling saw a sharp selloff in today’s session as the currency declined by more than 1% to the Greenback. Last week, Mark Carney in his speech had ruled out any prospects of a rate hike. The BoE meets later this week for its monthly monetary policy review ahead of tomorrow’s annual budget review.

The US trading session saw the release of Canadian and US trade balance data. Canada’s trade figures saw a wider deficit of $3.3bn, while the US trade balance was at $41.9 billion and better than expected. The US Dollar Index remained strong, rallying for the day, rising to 97.3 from the lows of 96.35

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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