Analysts at Westpac explained that Asia’s equity weakness extended to Europe and US trade, but AUD/USD paid little attention, trading either side of 0.7400.
“The data and event calendar was light but there is plenty today, including Australia June building approvals, the Bank of Japan decision, Eurozone Q2 GDP and July CPI, US July consumer confidence and Q2 employment cost index.”
“Risk sentiment was weighed down by another day of losses in US tech stocks. However, yields in Europe rose: 10yr German bunds +4bps and UK gilts 6bps, despite US yields continuing to hover around 2.96% for a fifth day. The notable commodity mover was oil which rose +2.0% on the back of geopolitical and supply concerns.”
“The euro outperformed, EUR/USD back above 1.17, up 0.4% over the day. GBP/USD also ticked up a little to 1.3130. USD/JPY was little changed, hovering around 111.00, awaiting the BoJ decision.”
“AUD/USD traded quietly, mostly 0.7390-0.7410. The kiwi outperformed in London trade, up 0.5% overall to 0.6820. Hence AUD/NZD fell 40 pips to 1.0860.”
“German July CPI headline slipped to 2.0% y/y (expected unchanged at 2.1%y/y). Although harmonised CPI was unchanged at 2.1% y/y, the release, together with a miss in Spanish CPI, opens the potential for a lower read in today’s Eurozone CPI.”
“US 10yr yields dipped but held around 2.97% for a fifth day, 2yr yields were a fraction lower at 2.66% while Fed fund futures were little changed, pricing about an 80% chance of a 26 September rate rise. However, European yields were higher: 10yr German bunds rose 4bps to 0.45%, UK gilts rose 6bps to 1.34%.”