Forex Afternoon Wrap – 04/08

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Aussie surges on better retail sales and RBA non-event

Key Notes:

  • Japan monetary base y/y 32.8% vs. 32.2%
  • New Zealand ANZ Commodity prices m/m -11.2% vs. -3.1% previously
  • Australia Retail sales m/m 0.7% vs. 0.5%
  • Australia Trade balance -2.93bn vs. -3.06bn
  • Japan average cash earnings y/y -2.4% vs. 0.9%
  • RBA leaves interest rates unchanged
  • UK Nationwide HPI m/m 0.4% vs. 0.4%
  • Australia commodity prices y/y -20.2% vs. -17.1% previously
  • Spain unemployment change -74k vs. -45.6k
  • UK Construction PMI 57.1 vs. 58.6
  • Eurozone PPI m/m -0.1% vs. -0.1%

Later

  • US Factory orders
  • IBD/TIPP Economic optimism

The currency markets were busy since the Asian trading session on account of important economic releases. Of particular interest was the economic data from Australia. Retail sales for the month grew at a strong pace of 0.7%, beating estimates. An hour or two later, the RBA released its monetary policy statement where it left interest rates unchanged. The tone of the RBA’s statement was also less dovish than anticipated. The Aussie staged a strong rally after the RBA’s release gaining over 1% on some currencies. However, the currency remains under pressure ahead of this week’s US jobs report and also the Australian jobs report due on Thursday.

The Kiwi dollar was also boosted, as the NZDUSD gained 0.65% at the time of writing. The currency pair initially fell below lows of 0.65565 to reverse its losses to trade near session highs of 0.66.

The Japanese Yen trading flat for the day, with no major economic data to go by. USDJPY was seen consolidating near the 124 level of support/resistance.

In the European trading session, there was little economic data of interest to the markets today. The Euro was however stronger against the Greenback, gaining 0.3% at the time of writing. EURUSD initially dipped from the open but quickly reversed direction to trade near 1.098.

In the UK, Nationwide house price index was steady at 0.4% in line with expectations. Construction PMI was relatively weaker at 57.1, falling below estimates of 58.6. The Cable was muted to the news however as the currency was up 0.2% against the Greenback. Tomorrow marks an important day for the GBP ahead of major economic releases.

The US trading session today is relatively quiet with the US factory orders and the IBD/TIPP economic optimism data due for release later in the evening. The US Dollar Index was trading soft today, losing -0.26% at the time of writing, trading near 97.33.

Crude oil prices are bouncing today after hitting new 4 month lows at 54.25. Crude Oil was up 1.19% today, trading near 45.87. Gold prices were also strong today, gaining 0.45% after the precious metal posted a strong intraday rally which saw prices reverse from session lows near 1082.5 to trade at 1091.82.

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