Forex Afternoon Wrap – 15/07

Jul 15, 12:52 pm

Markets await Yellen testimony and BoC rate statement

Key Notes:

  • Australia new motor vehicle sales m/m 3.8% vs. -0.8% previously
  • China GDP q/y 7% vs. 6.9%; industrial production y/y 6.8% vs. 6%
  • China retail sales y/y 10.6% vs. 10.2%
  • UK Average earnings index 3m/y 3.2% vs. 3.3%; claimant count change 7k vs. -8.9k; unemployment rate 5.6% vs. 5.5%
  • Canada manufacturing sales m/m 0.1% vs. 0.3%
  • US PPI m/m 0.4% vs. 0.2%; Core PPI m/m 0.3% vs. 0.1%
  • Empire state manufacturing index 3.9 vs. 3.4

Later

  • US Capacity utilization rate
  • Industrial production
  • BoC monetary policy and rate statement
  • Fed Chair Yellen testimony to congress
  • New Zealand GDT price
  • BoC Press conference
  • Greece Government vote on bailout

The currency markets got off with a weaker US Dollar as retail sales for month fell -0.3%, posting a weakest print since February. There was further disappointment with May retail sales revised lower as well. The US Dollar was initially weaker but managed to regain its ground. The Aussie was however trading flat for the day after turning positive yesterday, trading near 0.744 at the time of writing. The Kiwi dollar which posted a few straight session of gains, turned bearish with the currency declining from the opening highs of 0.67125 to trade near 0.667.

The Japanese Yen remained weak across the board with the USDJPY posting fresh weekly highs, trading near 123.78 after consolidating sideways for the past three sessions.

Other news from Asia included some positive data from China, where the GDP was confirmed at 7%. The industrial production was also positive, rising 6.8%.

In Europe, the Greek government is expected to pass the bills for reforms, but the ruling SYRIZA party is starting to face dissent. The Eurozone is proposing a 7 billion Euro worth of bridge loan to finance the country, which would come from the EFSF. However this requires participation from other EU countries as well. The bridge loan is offered only if Greece passes the set of reforms today.

The Euro was trading flat for the day and continues to remain range bound while signaling a possible break out in the near future. EURUSD was trading at 1.097 at the time of writing.

From the UK, the unemployment data missed estimates on all fronts. The average earnings index was soft at 3.2%, while the unemployment rate increased to 5.6%. The Pound Sterling was however muted to the data and continued to rally into the US trading session, before posting session highs above 1.566.

In the US, the producer price index rose 0.4% on the headline and 0.3% on the core, sending the US Dollar briefly higher. The Empire state manufacturing index also posted a positive print of 3.9 vs. 3.4 estimates.

Canada’s manufacturing sales grew at a slower pace for the month, rising 0.1%, below estimates of 0.3% and the Loonie weakened on the news, as the currency is seen trading back near the highs of 1.277 ahead of the BoC rate statement later in the day.

The economic calendar for the remaining part of the day includes Janet Yellen who is expected to testify to the senate banking committee and is expected to stay bullish on rate hikes. The BoC’s rate statement will be followed by the press conference as well.

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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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