Forex Trading Library

Forex Afternoon Wrap – 13/08

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China devalues Yuan for the third day. Currencies remain under pressure

Key Notes:

  • New Zealand business manufacturing index 53.5 vs. 55.1 previously
  • UK RICS house price balance 244% vs. 42%
  • Japan core machinery orders m/m -7.9% vs. -5.3%
  • Australia MI inflation expectations 3.7% vs. 3.4% previously
  • German final CPI m/m 0.2% vs. 0.2%
  • France CPI m/m -0.4% vs. -0.4%
  • Switzerland PPI m/m -0.3% vs. -0.2%
  • Canada NHPI m/m 0.3% vs. 0.1%
  • US Core retail sales m/m 0.4% vs. 0.4%; retail sales m/m 0.6% vs. 0.6%
  • US weekly unemployment claims 274k vs. 272k
  • US import prices m/m -0.9% vs. -1%

Later

  • Business inventories
  • Natural gas storage

China continued its currency market intervention by devaluing the Yuan for the third day in a row with the USDCNH up 4.5% since the devaluation began on Tuesday this week. The markets were however less muted than before but clearly under pressure. NZD and AUD were seen retreating from the gains made yesterday. NZDUSD was down -0.95% after falling from the highs near 0.66365, while the AUDUSD was down -0.6% from the daily session highs near 0.7404, but both the currencies were trading within yesterday’s range.

The Japanese Yen was weaker today as the USDJPY continued to retrace the losses from yesterday. USDJPY was up 0.3% after opening the day at 124.2.

The European trading session was quiet for the most part. CPI from France and Germany were mixed with French inflation continuing to fall -0.4% while German inflation posted a soft 0.2% reading for the month. The EURUSD was also trading weak today and was down -0.68% for the day at the time of writing.

The European central bank released its minutes of the monetary policy meeting held in July. The Central bank noted headwinds from China volatility and the Fed rate hike impact on the Eurozone economic recovery. On Greece, the Central bank was less worried noting that the risks were largely contained and a bailout deal would only affirm confidence in the Eurozone.

From the UK, economic data was sparse and the GBPUSD was mostly flat for the day. At the time of writing, GBPUSD was down -0.04% after the Cable tested the highs near 1.5654 yesterday.

The US trading session saw the release of the monthly retail sales data which broadly matched expectations both on the core and headline, rising 0.4% and 0.6% respectively. Weekly unemployment claims also showed that 274k new claims were registered against a median expectation of 272k. The Greenback surged on the news as the US Dollar Index was up 0.46% for the day trading near 96.85 after opening near 96.32.

From Canada, the national housing price index beat estimates rising 0.3% above estimates of 0.1% increase. However, USDCAD was stronger with the Greenback gaining ground and was up 0.6% for the day. There are no more major economic data scheduled for the remainder of the evening and the markets are expected to continue with the day’s theme with a stronger Greenback gaining ground across the board.

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