Forex Afternoon Wrap – 02/09

Australia marks the slowest pace of quarterly GDP growth

Key Notes:

• Japan Monetary base y/y 33.3% vs. 33.2%
• New Zealand ANZ commodity prices m/m -5.2% vs. -5.5% previously
• Australia GDP q/q 0.2% vs. 0.4%
• Spain unemployment change 21.7k vs. 35.5k
• UK Construction PMI 57.3 vs. 57.6
• Eurozone PPI m/m -0.1% vs. -0.1%
• US ADP nonfarm employment change 190k vs. 204k
• US revised nonfarm productivity q/q 3.3% vs. 2.9%; revised unit labor costs q/q -1.4% vs. -0.5%

Later

• US Factory orders
• Crude Oil inventories
• Beige Book

The currency markets were showing signs of fading risk aversion as the USDJPY managed to pare back its losses. USDJPY briefly tested the highs above 120.38 earlier today. The Chinese equity markets are closed for a week long holiday providing some temporary relief to the markets. The Asian trading session saw the release of the Australian quarterly GDP which grew at one of the slowest pace since 2012, rising only 0.2% for the quarter. The slowdown in the Australian GDP comes just a day after the RBA left interest rates unchanged but continued to maintain its accommodative monetary policy. The Aussie was trading flat early on today but was trending broadly weaker across the board. AUDUSD was trading near flat with 0.05% of gains at the time of writing after the currency briefly tested the lows near 0.6991.

NZDUSD started the day on a rather strong note but fell to session lows near 0.6312 before managing to trend higher to post session highs near 0.6368. The currency was quite volatile but remains stronger with 0.33% gains for the day.

The European trading session did not see any major releases with the exception of the UK construction PMI which missed estimates on a soft note, rising 57.3 below the median forecast estimates of 57.6. The GBPUSD continued to stay weak against the Greenback but was seen to be mostly ranging sideways, which could indicate a potential break out in the near term. The Cable tested the lows of 1.5266 and was down -0.11% for the day.

The Eurozone PPI data was also other economic release today which fell -0.1% as expected. The Euro was down -0.74% at the time of writing after the currency attempted to break above 1.3035 level of resistance and failed on two occasions.

The US trading session today saw the monthly ADP private payrolls data which showed a continued weakening trend in the pace of jobs. ADP private payrolls added 190k jobs falling below the estimates of 204k. The previous month’s ADP jobs numbers were also revised lower from 185k to 177k. The markets were however muted to the disappointing ADP report. The US Dollar Index was trending higher with gains of 0.51% for the day after two days of continuous decline in prices.

The remainder of the evening will see the US crude oil inventories report. WTI Crude oil was trending higher with gains of 3.12% for the day and continues to stay supported since last week’s EIA report. Other economic data from the US includes the US factory orders and the Fed’s Beige Book.