US Dollar recovers from yesterday’s losses. Focus on RBNZ
Key Notes:
- Australia CPI q/q 0.7% vs. 0.8%; CPI y/y 1.5% vs. 1.7%
- RBA Governor Stevens Speech
- BoE Minutes shows bank rate vote 0 – 9
- Italy retail sales m/m -0.1% vs. 0.0%; y/y 0.3% vs. 0.2%
- US HPI m/m 0.4% vs. 0.4%
- US existing home sales 5.49Mn vs. 5.40Mn; Existing home sales m/m 3.2% vs. 0.9%
The Asian trading session got off to a busy start with focus on Australia. The quarterly CPI saw a soft growth as consumer prices rose 0.7%, up from 0.2% from the previous quarter, albeit missing estimates of 0.8%. The trimmed mean CPI on a quarterly basis fell to 0.6%, from an upwardly revised 0.7%, matching estimates of 0.6%. The RBA had left interest rates unchanged at its meeting this month citing the need to assess the economic indicators further. The Australian dollar initially spiked on the news to post a daily session high to 0.74387 but failed to hold on to the gains as the currency fell back to trading new the daily lows of 0.737, but remains range bound within yesterday’s high and low.
RBA Governor, Stevens also gave a speech where he noted that the economic news from Australia has been more encouraging recently, while expecting to see an above trend growth in the near term. He however declined to comment on the Australian Dollar’s exchange rate.
Other economic data from Australia included the MI Leading index which remained flat for the month.
The Kiwi dollar was seen weaker today as the currency fell from the opening session near the highs above 0.66355 to post an intraday low of 0.6565. The NZD remains under pressure ahead of the RBNZ interest rate decision later tonight where expectations are somewhat dovish for an interest rate cut by the RBNZ by a further 25bps, taking down the overnight cash rate from 3.25% currently to 3%.
The Japanese Yen was weaker today after posting declines yesterday. USDJPY fell to daily lows near 123.585 but quickly recovered to post daily session gains above 124.
Heading into the European trading session the markets were relatively calm with focus shifting to the UK’s BoE rate hike vote count. Members of the BoE remained unanimous in keeping interest rates steady at 0.5%, with a 0 – 9 vote. The markets were initially surprised by the vote count considering the hawkish speeches given by the BoE Governor, Mark Carney himself. While the British Pound initially weakened to post intraday lows near 1.555, the Cable stabilized and soon rallied to trade near the daily highs at 1.563.
The Euro, single currency which saw a strong recovery yesterday was seen weaker as the European trading session got underway. EURUSD fell from the daily highs near 1.0954 to trade at 1.088 at the time of writing. Italian retail sales fell -0.1% for the month, below estimates of 0.1% and down from 0.7% previously.
The US trading session has a light day today with no major economic releases on the agenda. The housing price index for the month rose less than expected at 0.4%, below estimates of 0.5%, while the previous month’s data was revised higher to 0.4% from 0.3% as initially estimated. Existing home sales for the month grew by 5.49 million, above estimates of 5.40 million. For the month, existing home sales grew at a pace of 3.2% beating estimates of 0.9%, while the previous month’s data was revised lower to 4.5% from 5.1% as initially expected. The US Dollar was back to a recovery mode as the index continues to tread higher in a bid to recover the losses from yesterday. The index was seen trading at 97.7 at the time of writing after posting daily session lows just above 97.5.
