Markets sometimes have short memories. The head of the Australian central bank (Stevens) said overnight that the bank’s unchanged inflation outlook “afford some scope to ease policy further if needed to support demand”. This is pretty much identical in tone to the previous post-meeting statement, but the market took it as a reason to put pressure on the Aussie once again. Also not helping were the weaker than expected building approvals data, which showed a monthly decline of 6.9%. During July, the weaker dollar has protected AUDUSD from continuing the broader downtrend, but the reaction to the comments and data reflect the point that beneath the surface, the Aussie remains a currency struggling to keep its head above water.
USD: Consumer confidence currently at more than 5 year highs in the US. The expectation is that we will see it fall slightly to 81.3 (from 81.5). A firmer number would be marginally dollar positive, although focus is mainly on Friday’s jobs data in terms of impact on the dollar and volatility potential.
EUR: Confidence data of some interest this morning for the Eurozone. Consumer confidence data has been rising on this measure since November of last year, whilst rise in industrial confidence has been slower. Stronger data for both could support better tone to euro that has been bubbling away under the surface.
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AUD: Not only were building approvals data weaker than expected for June, but there was also a hefty revision to the May numbers, (from -1.1% to -4.3%). The low for July at 0.8999 remains the next downside focus for AUDUSD.
EUR: The euro continues to have a decent underlying bid, having been one of the strongest performers on the majors over the past 24 hours. However, a push above the 1.33 level on EURUSD has just been out of reach.
JPY: Modest reversal being seen after three consecutive days of declines on USDJPY. Data showed production weaker than expected, whilst the jobless rate fell to 3.9% (from 4.1%). EURJPY continues to play with the 130 level and the 50-day moving average, currently at 129.79.
Further reading: EUR/USD: Trading the US Advance GDP
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