Currency markets largely flat with lack of economic data
Key Notes:
- Japan Current Account 1.3 Trillion vs. 1.41 Trillion
- Japan consumer confidence 40.2 vs. 42.2
- Japan Bank lending y/y 2.6% vs. 2.5% previously
- Japan economy watchers sentiment 51.6 vs. 53.1
- Eurozone Sentix investor confidence 18.4 vs. 20.2
- FOMC Member Fisher speech
Later
- FOMC Member Lockhart speech
- Labor market conditions Index m/m
The currency markets opened today on a quiet note with not much of data to go by. Over the weekend, data from China saw the annual inflation rate rise modestly from 1.4% previously to 1.5%. However the producer price index remained weak, falling -5.4 from -4.8% as previously noted. The markets however did not react much to the news on today’s open.
Data from the Asian session include Japan’s consumer confidence which fell to 40.3 as consumers remain pessimistic about income and a weaker pace of wage growth. The Yen was however weaker as USDJPY started gaining at a steady pace since the markets opened. USDJPY gained from the daily open near 124.172 to test the highs near 124.744.
The Aussie and the Kiwi were trading weak falling from the opening session. AUDUSD tested the lows near 0.736 after opening the day at 0.74135. The NZDUSD also saw sharp declines as the currency briefly tested price near previous highs of 0.66185 before declining down to 0.6562.
The European trading session was very quiet with only the release of the Eurozone Sentix investor confidence, which fell to 18.4, below estimates of 20.2. The Greek government is expected to conclude the bailout talks by 11th August in order for the Eurozone national parliaments to pass the deal. This would result in giving access to the funds ahead an ECB payment that is due on August 20th. If the deal is ratified by the national governments, Greece stands to get access to €86 billion in bailout funds. The main issue being that Greece and its creditors need to agree on how much of funds is required and the reforms that need to passed as part of the deal.
EURUSD was mostly mixed for the day and was trading flat near the opening price. The single currency briefly tested the session lows near 1.09295 before reversing its losses sharply to trade back near the open. GBPUSD was flat and trading within Friday’s range.
The US trading session is expected to be very quiet with the exception of market reaction from Fed member speeches. Stanley Fischer, the Fed vice-chair was the first of the Fed members to speak today and focused most of his speech on inflation. He noted that there could be no rate hike until the Federal Reserve sees signs of inflation returning to normal levels. He noted that while the labour market was growing quickly, inflation has remained low.
The markets were largely muted to Fischer’s comments however. The US Dollar Index was also mostly flat for the day trading near the opening levels of 97.70. Later in the evening, Atlanta Fed Dennis Lockhart is also expected to speak and could continue to stay hawkish on interest rates.
