Search ForexCrunch

Analysts at Westpac explained that the Bank of Japan’s dovish statement and hopes over US-China trade talks supported equity markets and helped AUD outperform, probing 0.7440 in NY trade.  

Key Quotes:

“Today we see New Zealand Q2 employment data, a possible rate hike in India, US data on private payrolls, construction spending and manufacturing sentiment, then a very likely steady hand at the Federal Reserve.”

“Sentiment in financial markets continued to improve after the BoJ’s policy stance was seen as dovish, committing to extremely low interest rates at least through late 2019. A Bloomberg report that Sino-US trade negotiations could restart this week added to the positive shift in sentiment, supporting share markets and risk-sensitive AUD/JPY. The Chinese yuan strengthened sharply on the story, USD/CNH dropping from near 6.85 to lows under 6.78. Some hours later the Wall Street Journal claimed that US-China talks were very preliminary and had made little progress.
The JPY fall after the BoJ meeting extended on the Bloomberg US-China trade talk story, with the yen the weakest G10 currency on the day (AUD was strongest). USD/JPY pushed towards 112.00. USD clawed back early losses against EUR and GBP to be little changed on the day.

AUD/USD was choppy at times but probed 0.7440 in NY afternoon trade, completing a relatively quiet July. NZD/USD languished around 0.6810/20 so AUD/NZD rose 0.4% over the day, to just above 1.09. CAD recovered the ground it lost in Asia on NAFTA headlines, aided by an upside surprise on Canadian May GDP, which rose 0.5% m/m, 2.6% y/y.

The Fed’s preferred inflation gauge, the core personal consumption deflator, posted a benign 0.1% gain in June, the annual pace holding steady at 1.9%. Wage costs continue to show a mild non-threatening acceleration too, the Q2 Employment Cost index rising 0.6%, lifting the annual rate to 2.8%, from 2.7% in Q1. The July Chicago manufacturing PMI rose to 65.5 from 64.1, comfortably above expectations while the Conference Board’s Consumer confidence survey rose to 127.4 from 127.1. Household confidence in current conditions and the jobs market hit new seventeen year highs.”