Forex Afternoon Wrap – 07/10

Bank of Japan leaves policy intact. QQE unchanged at 80tn Yen

Today’s Economic Data:

• Australia AIG construction index 51.9 vs. 53.8 previously
• UK BRC Shop price index y/y -1.9% vs. -1.4% previously
• BoJ leaves policy unchanged
• Japan leading indicators 103.5% vs. 103.4%
• German industrial production m/m -1.2% vs. 0.3%
• UK manufacturing production m/m 0.5% vs. 0.4%; industrial production m/m1.0% vs. 0.3%
• Canada building permits m/m -3.7% vs. 0.5%

Later:

• UK NIESR GDP estimates
• US Crude Oil inventories
• US Consumer credit

The AUD and the NZD remained firm in their strong rallies today as the NZDUSD posted a new 7-week high. The gains in NZDUSD were solidified as the Global dairy trade data remained positive, rising 9.9% in the data released yesterday. NZDUSD touched a new high, trading above 0.663 today, gaining nearly 1.3% for the day. The Australian dollar was the second strongest currency notching up gains of 0.91% for the day against the US Dollar. Data from the Asian trading session saw the release of the AIG construction index fall to 51.9 from 53.8 previously.

The Asian equity markets closed in the green with the Nikkei 225 up 0.15% despite the BoJ holding off its monetary policy QQE expansion. The Shanghai index gained 0.50% while the Hang Seng was up 3.13%.

The Bank of Japan’s monetary policy meeting was largely a non-event as the central bank stuck to its usual rhetoric of keeping an optimistic view that Japan would hit the 2% inflation target rate. While the Yen gained ground on the news, the gains were given back. USDJPY is down -0.18% for the day after a brief rally to 120.3.

The European session got off to a modest start with the equity markets posting gains of 1.18% on the German DAX while the FTSE100 gained 0.64%. The single currency was the weakest currency losing -0.11% after EURUSD touched session highs of 1.1275 before giving back the gains. Germany’s industrial production fell 1.2%, below estimates of 0.3% adding to further pressure on the Euro.

The UK’s industrial and manufacturing production data both posted gains, beating estimates and rising 0.5% and 1.0% respectively. The data gave some boost to the British Pound which is up 0.64% against the Greenback posting a session high to trade above 1.53 at the time of writing.

The US trading session saw the release of the Canada’s building permits which declined -3.7% below estimates of 0.5% growth. The Canadian dollar shrugged off the weak print as the USDCAD fell -0.21%. The Canadian dollar remained firm led by gains in Crude Oil prices which touched highs of $49.69 after prices were ranging sideways for nearly a few weeks. Crude oil inventories report is due later this evening with expectations that the US stockpiles increased 2.2 million barrels.

The remainder of the trading session today will see the UK’s NIESR GDP estimates and the US consumer credit data. The equity markets are looking to open another day with gains as the Dow Jones index futures point to a 0.69% gain while the S&P500 opens 0.64% higher.