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3 Sep 2015
Aussie dumped on weak fundamentals, ECB – In Spotlight
FXStreet (Mumbai) - A calmer Asian session with Chinese markets closed for the rest of the week on Victory day holidays, provided much needed respite to the financial markets. On the data space, Aussie was weighed down by weaker retail trade data while Kiwi was bid on above estimates housing figures.
Key headlines in Asia
IMF: Downside risks to the global economy have risen
Australia's July retail sales miss expectations
Asian stocks higher led by Nikkei, China off until Monday
Dominating themes in Asia - centered on JPY, AUD, NZD
An eventful Asian session, though a relatively less volatile one, as China traders remained on side line as the country’s markets were closed in observance of Victory day. Market sentiment remained favorable towards the US currency, with the greenback extending previous gains against its major rivals.
USD/JPY was the biggest beneficiary of the persisting US dollar strength as traders continued to hold the buck ahead of the key US data – NFP due on Friday. USD/JPY hovered around 120.50 levels, up 0.18% on the day. While EUR/USD remained pressured ahead of the ECB meeting which is widely expected to be dovish amid the recent market volatility and lower inflation levels.
The bearish pressure around the Aussie remains intact, as renewed selling interest on the back of subdued retail sales data kept the Australian dollar undermined on the 0.70 handle. Retail sales declined 0.1% month-on-month in July after climbing a revised 0.6% in June, according to the Australian Bureau of Statistics (ABS), while markets had expected to see a 0.4% rise in July sales. While markets completely ignored Aus trade data.
The Kiwi, on the other hand, held onto 0.63 barrier and erased early gains spurred by better than expected NZ buildings data. Total building activity amounted to over $4 billion in the June quarter, up 8% on the same quarter in 2014, and the highest value ever recorded since the series began 50 years ago. The value of all building activity rose 1.6% over the quarter, beating market estimates of a 0.5% increase.
Besides, Asian indices are rallying on Thursday. Japan’s benchmark index, the Nikkei is rallying 1.35% at 18340 while the Hong Kong's benchmark Hang Seng index trades muted amid thin liquidity at 20,935, the benchmark Australian S&P/ASX 200 index bucked the trend and is losing -0.97% at 5,052. While Korea's benchmark Kospi index pared gains and now trades flat at 1,916 points in Seoul.
Heading into Europe - centered on EUR, GBP
The European calendar this week remains eventful, with Thursday bringing in the key event – ECB monetary policy meeting. While services PMI readings across the Euro area economies will be closed watched. However the main focus will remain on the UK services sector activity after the recent downbeat manufacturing and construction PMI reports.
Also, results from the euro zone's retail business in July are due.
The euro zone services sector reported 54.3 last time, with the same number expected as a final result. While the flash PMI for the euro area's number one economy's services sector showed 53.6.
The UK services PMI in August is also seen ticking up to 57.5 from the 57.4 booked in the previous cycle.
All eyes on ECB
With the summer months now at an end, the Governing Council of the European Central Bank (ECB) is set to convene in Frankfurt on Thursday, to reveal fresh macroeconomic forecasts for the Eurozone. While the growth outlook is widely seen as stable, the inflation forecasts are built on shaky foundations, given the latest commodity market development and China-related turmoil, providing scope for further monetary stimulus expansion.
Hence, many economists think the central bank should extend the duration or broaden its €60 billion a month asset-purchase program, originally scheduled to run until September 2016. The ECB has already kept its key interest rate at 0.05% since 2014.
Looking towards the New York session, the US trade figures are likely to play second fiddle to the weekly jobless claims due later today. That said, markets are expecting the deficit to narrow slightly to $42.2 billion in July from $43.8 billion in nominal terms in June.
While, Wall Street expects a mere 275,000 people to have applied for jobless claims in the final week of August, a modest increase on the previous reading.
Still, claims have been below the 300,000 mark for quite some time, even dropping to multi-decade lows in recent weeks.
Key headlines in Asia
IMF: Downside risks to the global economy have risen
Australia's July retail sales miss expectations
Asian stocks higher led by Nikkei, China off until Monday
Dominating themes in Asia - centered on JPY, AUD, NZD
An eventful Asian session, though a relatively less volatile one, as China traders remained on side line as the country’s markets were closed in observance of Victory day. Market sentiment remained favorable towards the US currency, with the greenback extending previous gains against its major rivals.
USD/JPY was the biggest beneficiary of the persisting US dollar strength as traders continued to hold the buck ahead of the key US data – NFP due on Friday. USD/JPY hovered around 120.50 levels, up 0.18% on the day. While EUR/USD remained pressured ahead of the ECB meeting which is widely expected to be dovish amid the recent market volatility and lower inflation levels.
The bearish pressure around the Aussie remains intact, as renewed selling interest on the back of subdued retail sales data kept the Australian dollar undermined on the 0.70 handle. Retail sales declined 0.1% month-on-month in July after climbing a revised 0.6% in June, according to the Australian Bureau of Statistics (ABS), while markets had expected to see a 0.4% rise in July sales. While markets completely ignored Aus trade data.
The Kiwi, on the other hand, held onto 0.63 barrier and erased early gains spurred by better than expected NZ buildings data. Total building activity amounted to over $4 billion in the June quarter, up 8% on the same quarter in 2014, and the highest value ever recorded since the series began 50 years ago. The value of all building activity rose 1.6% over the quarter, beating market estimates of a 0.5% increase.
Besides, Asian indices are rallying on Thursday. Japan’s benchmark index, the Nikkei is rallying 1.35% at 18340 while the Hong Kong's benchmark Hang Seng index trades muted amid thin liquidity at 20,935, the benchmark Australian S&P/ASX 200 index bucked the trend and is losing -0.97% at 5,052. While Korea's benchmark Kospi index pared gains and now trades flat at 1,916 points in Seoul.
Heading into Europe - centered on EUR, GBP
The European calendar this week remains eventful, with Thursday bringing in the key event – ECB monetary policy meeting. While services PMI readings across the Euro area economies will be closed watched. However the main focus will remain on the UK services sector activity after the recent downbeat manufacturing and construction PMI reports.
Also, results from the euro zone's retail business in July are due.
The euro zone services sector reported 54.3 last time, with the same number expected as a final result. While the flash PMI for the euro area's number one economy's services sector showed 53.6.
The UK services PMI in August is also seen ticking up to 57.5 from the 57.4 booked in the previous cycle.
All eyes on ECB
With the summer months now at an end, the Governing Council of the European Central Bank (ECB) is set to convene in Frankfurt on Thursday, to reveal fresh macroeconomic forecasts for the Eurozone. While the growth outlook is widely seen as stable, the inflation forecasts are built on shaky foundations, given the latest commodity market development and China-related turmoil, providing scope for further monetary stimulus expansion.
Hence, many economists think the central bank should extend the duration or broaden its €60 billion a month asset-purchase program, originally scheduled to run until September 2016. The ECB has already kept its key interest rate at 0.05% since 2014.
Looking towards the New York session, the US trade figures are likely to play second fiddle to the weekly jobless claims due later today. That said, markets are expecting the deficit to narrow slightly to $42.2 billion in July from $43.8 billion in nominal terms in June.
While, Wall Street expects a mere 275,000 people to have applied for jobless claims in the final week of August, a modest increase on the previous reading.
Still, claims have been below the 300,000 mark for quite some time, even dropping to multi-decade lows in recent weeks.