AUDUSD (0.73): The Aussie is up 3.74% at the time of writing, as the currency hit a high of 0.732 before easing back lower. Besides the risk on sentiment in the markets which has led to a strong rally in AUDUSD, the RBA left interest rates unchanged at its meeting this week. The RBA’s statement was also very neutral leaving the Aussie quite some room to rally. Home loans for the month increased less than expected at 2.9% missing estimates of 4.9%.
- AIG services index 52.3 vs. 55.6 previously
- MI Inflation gauge m/m 0.3% vs. 0.1% previously
- ANZ Job advertisements m/m 3.9% vs. 1.3% previously
- Australia trade balance -3.10bn vs. -2.48bn
- RBA leaves cash rate unchanged at 2.0%
- AIG Construction index 51.9 vs. 53.8
- Home loans m/m 2.9% vs. 4.9%
EURUSD (1.13): The Euro is currently flirting near two week high trading at 1.135 at the time of writing. EURUSD gained nearly 1.22% against the Greenback. Data from Eurozone this week was mixed and soft with no major economic releases to account for the rally. The weaker Greenback and scaled back expectations of the US rate hike saw the Euro post some gains. Germany’s industrial production fell -1.2% below estimates of 0.3% while the Eurozone Sentix investor confidence increased softly to 11.7 but below estimates of 12.2. The rally in EURUSD could however come under pressure as the ECB revealed that it was ready to stand by for expanding its QE purchase program.
- Spain services PMI 55.1 vs. 59.7
- Italy services PMI 53.3 vs. 54.8
- France services PMI 51.9 vs. 51.2
- Germany services PMI 54.1 vs. 54.4
- Eurozone services PMI 53.7 vs. 54.0
- Eurozone Sentix Investor confidence 11.7 vs. 12.2
- Retail sales m/m 0.0% vs. -0.1%
- German factory orders m/m -1.8% vs. 0.5%
- Retail PMI 519 vs. 51.4 previously
- German industrial production m/m -1.2% vs. 0.3%
- Germany trade balance 19.6bn vs. 20.2bn
- France industrial production m/m 1.6% vs. 0.6%
- Italy industrial production m/m -0.5% vs. -0.3%
NZDUSD (0.66): The Kiwi was the top performing currency this week as the NZDUSD rallied as much as 3.86% to post a near 7-week high trading near 0.668 before easing back lower. There were no major economic releases from New Zealand this week but the gains in NZDUSD were largely on account of FX flows which saw a risk on sentiment which gave rise to the rally in the Kiwi. Data from New Zealand this week included the Global Dairy Trade index which increased 9.9% a modest slowdown from 16.5% increase previously.
- NZIER Business confidence -14 vs. 5 previously
- GDT Price index 9.9% vs. 16.5% previously
USDJPY (120.2): The Japanese Yen remained flat for the week, albeit rising 0.24%. Prices briefly posted a high of 120.5 before giving back some of the gains. USDJPY remained range bound for the 7th consecutive week. The Bank of Japan left its policy unchanged and refrained from expanding its QQE program at this month’s meeting and stuck to the narrative that the Japanese Central Bank remained optimistic of inflation reaching the 2.0% target rate. Besides the BoJ other data from Japan this week included the average cash earnings which grew less than expected at a pace of 0.5% annualized, less than expected, as core machinery orders fell -5.7% and the economy watchers sentiment fell to 47.5.
- Average cash earnings y/y 0.5% vs. 0.7%
- BoJ leaves monetary policy unchanged
- Core Machinery orders m/m -5.7% vs. 3.3%
- Economy watchers sentiment 47.5 vs. 48.6
USDCAD (1.29): The USDCAD continued to fall as a weak US dollar and strong Crude oil prices managed to offer support to the Canadian dollar. USDCAD fell to weekly lows below 1.2924 before attempting to recover some of the losses, but remains weak with -1.40% losses for the week. Data from Canada remained mixed this week as the Ivey PMI fell to 53.7 below estimates of 54.1. Building permits were also down -3.7% for the month. The monthly jobs report from Canada showed a mixed picture with the employment change rising 12.1k above estimates of 10.5k. However, the Canadian unemployment rate ticked higher to 7.1% from 7.0% last month and missing estimates which called for the Canadian unemployment rate to fall to 6.9%.
- Trade balance -2.5bn vs. -1.1bn
- Ivey PMI 53.7 vs. 54.1
- Building permits m/m -3.7% vs. 0.5%
- Housing starts 231k vs. 202k
- NHPI m/m 0.3% vs. 0.2%
- Employment change 12.1k vs. 10.5k
- Unemployment rate 7.1% vs. 6.9%
GBPUSD (1.53): The British Pound managed to recover off the weekly lows near 1.515 and posted a strong rally this week, rising 1.09% for the week to post a weekly high near 1.538. The gains in the Cable came amidst a weak economic data this week from the UK which has triggered speculation of an economic slowdown during the third quarter. While industrial and manufacturing production increased more than expected for the month, the BoE stood pat on policy with only one dissenter in favor of rate hikes. The BoE took a dovish stand noting that monetary policy remained accommodative while inflation remains subdued.
- Services PMI 53.3 vs. 56.4
- Halifax HPI m/m -0.9% vs. 0.1%
- BRC Shop price index y/y -1.9% vs. -1.4% previously
- Manufacturing production m/m 0.5% vs. 0.4%
- Industrial production m/m 1.0% vs. 0.3%
- NIESR GDP estimates 0.5% vs. 0.5% previously
- BoE leaves interest rates unchanged at 0.5%
- Trade balance -11.1bn vs. -10.0bn
- Construction output -4.3% vs. 1.0%
USDCHF (0.96): USDCHF is down nearly -1.08% for the week after a failed attempt to rally above 0.975 posting a weekly high before declining lower. USDCHF is currently attempting to recover some of the losses after posting a two week low of 0.958. Data from Switzerland this week saw the monthly inflation figures matching estimates, rising 0.1%. The Swiss unemployment rate was also modestly higher at 3.4%, up from 3.3% last month.
- CPI m/m 0.1% vs. 0.1%
- Foreign currency reserves 542bn vs. 540bn previously
- Unemployment rate 3.4% vs. 3.4%
US Dollar Index (94.92): The US Dollar Index is down nearly -1.2% for the week and continues to trend lower. Data from the US this week was mostly soft with the services and non-manufacturing PMI both coming out week. The only bright spot was the weekly unemployment claims which increased 263k less than expected. However, the focus this week remained the FOMC meeting minutes which revealed that FOMC members were strongly concerned about failing to reach the inflation target of 2.0%. With a weak jobs report last week, expectations fade for an October rate hike and with no real signs of inflation rising in the near term, most expect the Federal Reserve to potentially push back rate hikes to early 2016. The US Dollar Index is trading at 94.92 and is expected post more steep declines in the near term.
- Final services PMI 55.1 vs. 55.7
- ISM non-manufacturing PMI 56.9 vs. 58
- Trade balance -48.3bn vs. -47.6bn
- Unemployment claims 263k vs. 274k
- FOMC meeting minutes
- Import prices m/m -0.1% vs. -0.5%